Avoiding Common Payroll Pitfalls in Small Companies
Welcome! Today’s chosen theme is: “Avoiding Common Payroll Pitfalls in Small Companies.” Discover practical guidance, lived-in stories, and simple routines that help small teams pay people correctly, stay compliant, and sleep easier. Subscribe and join the conversation if payroll tasks ever make your stomach drop before payday.
Employee vs. Contractor: Getting Classification Right
The Real Cost of Misclassification
A creative studio once labeled frequent freelancers as contractors, only to face back taxes, overtime reclassifications, and interest after an audit. The money hurt, but the real sting was trust lost with the team. Share how you decide roles, and ask questions if classification choices ever feel murky.
Time Tracking and Overtime: Accuracy Over Assumptions
Paper timesheets invite rounding errors and forgotten edits. Digital tools with approvals, audit logs, and geofencing protect both managers and employees. Set clear policies for breaks and travel time. Comment with your current time tracking method, and we’ll share a simple policy template for small teams.
“Salaried” does not equal “exempt.” Confirm duties tests and salary thresholds for exemptions. Some states stack stricter rules on top of federal law. One bakery learned this after a holiday rush produced unpaid overtime. Don’t repeat that story—tags, schedules, and automatic overtime rules can prevent costly surprises.
Buddy-punching and logged-but-unpaid hours can snowball into wage claims. Use approvals, IP restrictions, and regular reviews. Encourage people to report discrepancies without fear. Ask your team to share one improvement idea this week. We’ll compile the best suggestions into a reader-sourced payroll playbook.
Taxes, Withholding, and Deposit Schedules
Collect current Forms W-4, including state equivalents where required. Use updated tax tables and apply the correct method—wage bracket or percentage. Recalculate when someone changes elections or status. Invite questions about tricky scenarios, like multiple jobs or bonus checks, and we’ll answer in next week’s post.
Taxes, Withholding, and Deposit Schedules
Know your deposit frequency—monthly or semiweekly—based on the lookback period. Use EFTPS enrollments, calendar reminders, and dual-approval workflows. A missed deposit can trigger cascading penalties. Comment if you want our deposit schedule template; we’ll send a clean version you can customize immediately.
Deductions and Benefits: Pre-Tax, Post-Tax, and Pitfalls
Pretax vs. Post-Tax Clarity
Make sure health premiums, traditional 401(k), HSA, and FSA deductions reduce taxable wages correctly. Keep Roth 401(k) as post-tax. Misclassifying these can distort W-2 boxes and withholdings. Ask for our quick-reference deduction matrix, and share which benefits confuse your team most.
Garnishments and Court Orders
Child support, tax levies, and wage garnishments follow strict priority rules and caps. Set a standardized intake process: verify documents, calculate properly, and communicate respectfully with affected employees. Tell us if you need a starter SOP, and we’ll include it in an upcoming subscriber download.
Fringe Benefits That Trigger Taxes
Company vehicles, commuting benefits, gift cards, and relocation payments can be taxable. Track fair market values and add them to wages on time. A small agency corrected this midyear and avoided bigger fixes later. Comment with your fringe benefit questions for a plain-English explainer.
Onboarding to Offboarding: The Lifecycle of a Paycheck
Collect Form I-9, Form W-4, direct deposit authorization, and any state new-hire forms. Enter names exactly as shown on IDs, and confirm Social Security numbers. Set job codes and exempt status correctly on day one. Want our onboarding packet checklist? Subscribe and we’ll send it this week.
Onboarding to Offboarding: The Lifecycle of a Paycheck
Some states require immediate payment at termination; others set specific timelines. Factor in earned PTO payout rules and last-day expense reimbursements. A retail shop regained trust by paying a departing employee the same day. Ask for our state-by-state final pay guide in the comments.
Payroll Tech and Integrations
Look for automated taxes, self-service portals, mobile time capture, and clear support. Avoid systems that bury setup behind jargon. A two-person shop cut processing time in half after switching. Share your must-have features and we’ll publish a community-sourced comparison.
Payroll Tech and Integrations
Map earnings and taxes to the general ledger with clean account codes. Sync employee data to avoid double entry. Dimensional tags by department or project make reporting effortless. Comment if you want our sample GL mapping sheet for faster reconciliations.
