When it comes to payroll, there are a lot of moving parts. And when something goes wrong, the consequences can be serious. A small error here or there can have a huge snowball effect and become a major problem for your business. We’ll take a look at some of the most common payroll mistakes and what you can do to avoid them.
An Employee is overpaid – what to do
If you find that you have overpaid an employee, the first thing you should do is reach out to them and explain the situation. You will need to ask them to return the overpayment as soon as possible. If they are unable or unwilling to do so, you and the employee will need to agree to a repayment plan.
It is important to note that you can only adjust the following payrun to correct the overpayment if the employee has instructed you to do so in writing and it is primarily for the employees benefit to do so.
On the other hand, if An Employee is underpaid
You will need to make a payroll adjustment for the amount that was underpaid. This payroll adjustment should be made as soon as possible, and it should be for the entire amount that was underpaid.
Payslips with incorrect information – can lead to wage disputes
Providing your employees with payslips that have incorrect information, it can lead to wage disputes. These disputes can be time-consuming and expensive to resolve. They can also damage your relationship with your employees.
To avoid these problems, make sure that you double-check all of the information on your employees’ payslips before you give them to your employees. This includes their name, job title, salary, hours worked, and any deductions that have been made.
If you make a mistake on an employee’s payslip, let them know as soon as possible and provide them with a corrected version.
Late superannuation payments – fees and interest charges may apply
If you are late making superannuation payments for your staff, you may be charged fees and interest. The amount will depend on how late the payment is and how much money is owed.
You may also be subject to penalties if you don’t pay your payroll taxes on time. The penalty will be determined by how much tax you owe and when you submit your payment.
Tips for ensuring accuracy and compliance with payroll regulations
First, make sure that you have all of the necessary information for each employee. This includes their legal name, tax file number, date of birth, address, and phone number.
You will also need to know their job title, start date, salary, and the number of hours they work.
Second, keep accurate records of all payroll transactions. This includes wages paid, leave taken, deductions made, and taxes withheld.
Third, stay up to date on all payroll changes. This includes changes to tax rates, payroll regulations, superannuation rates and award entitlements.
Finally, make sure that you have a payroll compliance plan in place. This should include procedures for handling payroll mistakes, overpayments, and underpayments.
When it comes to payroll, accuracy is key.
If you do have difficulties, there are various resources for assistance.
The Australian Taxation Office (ATO) is the government agency responsible for PAYG withholding taxes. They have a payroll helpline that you can call for assistance. You can also visit their website for payroll resources, including information on PAYG withholding tax rates, payroll obligations, and payroll record-keeping.
Another resource is the Fair Work Ombudsman (FWO). The FWO is responsible for enforcing payroll laws in Australia. They can help you if you have questions about your rights or responsibilities as an employer.
You can visit their website for payroll resources, including information on minimum wage rates, payroll deductions, and payroll record-keeping.
If you are having trouble meeting your payroll obligations, you can also contact a payroll service provider. These companies can help you with all aspects of payroll, including compliance, tax reporting, and payments.
While mistakes in payroll can be costly, there are resources available to help you avoid them. By staying informed and keeping accurate records, you can ensure that your payroll is compliant with all laws and regulations.
Lucent Advisory specializes in outsourced HR and payroll solutions for Australian SMEs. We provide HR services that are both necessary and reliable, as your business grows. We combine new-age thinking with cutting-edge technology to create a cloud-based, end-to-end HR and payroll program that is integrated and affordable for small businesses.
Give us a call on 08 8471 7007 or contact us via email if you’d like to discuss your requirements.