Being responsible for the delegation and organization of payroll in a busy hospital setting can be a challenge. It may be easy for you to get distracted with other priority tasks like filling out paperwork or answering phones. However, it can lead to errors that may cause financial problems if a fool-proof system cannot consistently regulate it.
Employees may not be getting paid what the company owes them, or there may be some tax forms that you forgot to fill out during your hectic day, which might only cause more issues down the line. When assessing how to fix payroll errors that you commonly experience, having a specific set of steps to go through during the payroll process may help you stay on track with employment records and payment transactions.
For people who are busy doing several tasks at once, miscalculations can easily occur if there is not enough time to dedicate to all payroll elements. However, miscalculations can often cause an incorrect paycheck and leave employees feeling frustrated if they receive a lower wage than they anticipated. On the other hand, a wrong calculation can also pay employees way more than necessary, which can cause an imbalance in funds for additional resources. These kinds of common payroll errors may affect employees who are:
- On disability or some other kind of leave.
- Using sick or vacation pay.
- Receiving benefits.
- Working overtime.
- Newly hired employees.
These mistakes may also occur if you are classifying your employees incorrectly as freelance contractors, part-time and exempt employees. Be sure to also keep reminders of rules and regulations for any employees who might live out of state, such as traveling nurses. A misclassification may cause an employee to lose eligibility for certain benefits and wages, leading to a payroll error and possible penalties.
Ultimately, miscalculation of your payroll can leave your employees without their deserved wages while the issue is being resolved and prevent them from being able to pay their bills.
Not Reporting All Forms of Taxable Employee Compensation
There are many different forms associated with taxable employee compensation, so you may find that it is common for a few of them to be forgotten or overlooked. It may be difficult to keep track of all of the necessary forms that are required for you or your employees to fill out. Using the wrong tax rates can also lead to errors in payroll that affect other elements of your finances.
Gathering your employee’s tax information and sending out any required forms, such as W-2 forms 1099s, ahead of time may help prevent a mistake. It would be wise to regularly check your employment tax rates to see how they may have changed or updated in any way. It’s also a good idea to keep tabs on the following tax rates and keep them in mind when doing payroll:
- Federal income tax
- Social Security tax
- Medicare tax
- Federal unemployment tax
- State income tax
- State unemployment insurance tax
- Local income tax
Keeping verified and precise tax records and other employee information for taxable compensation may help keep you in compliance with federal and state regulations. Properly tracking your payroll process in this way may prevent you from having to deal with penalties, lawsuits, or fines in the future if you make a mistake.
Human errors can affect all of these listed issues if your staff runs the payroll system through a manual process. Record keeping comes with a lot of responsibility and may seem overwhelming for those who haven’t had much experience. It may be common for those in charge of overseeing these actions to find that their own forgetfulness or failure to double-check can cause payroll issues. Some of the problems caused by human error can include:
- Processing payments
- Storing or delivering paper checks
- Organizing paperwork
- Filing employee or employer tax forms
It is also possible that employee hours may not be accurate due to management system issues or incorrect calculations. These problems may all be worth keeping in mind when trying to come up with solutions on how to avoid payroll errors.
If you rely on physical paperwork to complete your accounting process, it may leave more room for errors as another source may not always confirm it. A digital software system that can help track finances may be beneficial for human resources management if there are often discrepancies with employee hours. This type of system may be helpful by alerting or notifying you if there are any significant or unusual changes in payroll. Payroll input, taxes, and paycheck delivery can also be affected by human error.
Manual payroll errors might also go undetected if there are no backup plans in place to review precisely where or when a mistake has occurred. If your administration is overworked or understaffed, there may not be enough people or time to ensure all aspects are under control. This conflict may lead to issues that can cost a lot of time and money in penalties to rectify if it occurs consistently.
Overtime is an important aspect of payroll because of the federal overtime provisions under the Fair Labor Standards Act (FLSA). Paychecks should include any overtime that eligible employees log during each payroll period. However, this may be challenging to stay on top of because the calculations and exemptions can vary for each employee or employer, depending on your state.
For example, some employees, such as nurses may be exempt from overtime earnings as learned professionals depending on their position and how much they are earning.
If anyone miscalculates overtime, some employees may be getting paid more or less than what they clocked in for. The FLSA requires that most covered employees who work over 40 hours a week generally receive 50% more of their original hourly wage for every additional hour. However, most states and cities have different laws on this specification, so you can check if your process aligns with the rules for your area.
Suppose you accidentally miscalculate the wages for your employees who work overtime or give them paid time off instead of overtime. In that case, it can cause additional consequences of payroll errors depending on if your employees are salaried or exempt.
Request a Demo With MIP Fund Accounting
Investing in the right tools and software can make a huge difference in preventing errors in your payroll system. Accounting software that can take care of most of the work for you can improve the efficiency of your processing and transactions. With MIP Fund Accounting, you can feel confident in our software that provides a flexible chart of accounts designed to record and report on multiple funding sources.
We offer a comprehensive, configurable system for financial management and informed decision-making that can assist in integrated payroll and benefits enrollment, as well as budgeting. We strive to provide HR management solutions that make reporting and accountability requirements easier for you. We can help you handle your financial complexities more efficiently with advanced security, implementation, training services, and scalable and configurable software.