Payroll is an essential part of any business. Inaccurate payments and faulty record-keeping can result in costly errors. In fact, for the 2018 fiscal year, the IRS issued roughly 4.9 million penalties concerning employment taxes. Penalties associated with payroll inaccuracy totaled more than $29.3 billion. Needless to say, accurate payroll is essential for any employer, big or small.
Payroll software provides immeasurable benefits to businesses, making complying with regulations and avoiding discrepancies easy and inexpensive. Outlined below are three ways in which utilizing online payroll solutions can help a business keep up with regulations:
Basic payroll tools may offer some payroll functions, but they do not collect data concerning payments and operational efficiency. The newest online payroll software can provide detailed reports across multiple platforms. More specifically, payroll software can generate salary statements, review salary benefits and store payslips with easy printing access.
With payroll software, employers can also more easily manage employee earnings, generate reports and enjoy an overview of the company as a whole. This feature will save valuable time and improve company oversight, which will result in fewer costly errors in the long term. For example, quarterly audit reports, leave status and direct labor distribution documents are all auto-generated, relieving the company from time-consuming work.
Bottom line: Accurate record-keeping ensures that businesses do not have to pay insurmountable fees for simple errors, fees that can add up quickly.
Online payroll solutions can also save companies the trouble of filing and computing payroll taxes. Employee taxes are filed automatically on time, avoiding potential penalties due to failure to meet the deadline.
Moreover, the software is always up to date with the newest tax regulations. Some of the laws governing payroll at the federal level include Fair Labor Standards Act (FLSA), Federal Insurance Contributions Act (FICA), and the Federal Unemployment Tax Act (FUTA), just to name a few.
Staying informed about new regulations can be difficult for busy business owners. Unless a company has the resources to hire someone full-time to manage payroll, it is unlikely for them to avoid violating one or another regulation. Online payroll solutions take the guesswork out of such tax regulations.
Arguably the greatest feature of payroll software is its consistent accuracy. When kept up to date through software updates, the software will calculate employee payroll without error. The software can also pre-fill tax forms with workers’ payroll information and keep records up to date to the hour via an unbiased third party. Removing the possibility of human error alone increases efficiency.
Not only is accuracy important to avoid violating the regulation, inaccurate payments and filing can do long-term damage to employees’ trust in their employer. Online payroll solutions allow employers to maintain this trust long-term.
There is no denying that even minor tax errors and failure of compliance can result in hefty fines. It is better to avoid these complications in the first place, and the easiest way to do so is by using payroll software.