What Payroll Errors Really Cost
Payroll is usually one of the largest expenses for a company and can get even more expensive when mistakes happen. What kind of mistakes, and how do these mistakes happen?
Let’s take a look.
Compliance Errors = Penalties
Complying with all existing laws your business falls under is difficult, but the cost of non-compliance can prove significant. Since there are many laws focusing on the aspects of payroll, it’s vital steps are taken to follow those laws. If payroll errors lead to late tax payments, incorrect salaries or incorrect employee details – you’re subject to major penalties and other repercussions.
Misclassified Employees = Retroactive Taxes
Your staff is either classified as permanent, part-time or contractors. When workers are classified as employees, as an employer you’re responsible for paying overtime, benefits, superannuation, insurance and payments like paternal or maternal leave. When a worker is listed as a contractor, these payments differ or don’t exist at all.
If a contractor is incorrectly listed as an independent contractor instead of a full-time employee, for example, it can prove costly, You may need to retroactively pay overtime and back taxes, and your company is then out under the spotlight by Fair Work.
Fixing Errors = Labour Hours
No error can be left uncorrected when it comes to payroll. Records must be accurate, the ATA must have every cent accounted for, and employees need to be paid their due. If mistakes are made, hours are spent correcting those mistakes instead of doing actual productive work.
In some cases, correcting mistakes may take more time then the payroll did in the first place. These same errors can be hard to identify and even harder to rectify. This will impact your bottom line.
Short Payments = Lost Trust
Your staff count on their weekly, fortnightly, monthly or annual pay to be correct to the cent. When those paychecks come later than agreed, or are not the amount listed in the contract, it can affect their personal life and lead to extreme dissatisfaction in their role. Besides a personal issue, this effects productivity and attendance, even if it only happens the once.
Payroll Error Turnover = Hiring Costs
Employees may decide to leave if there are regular payroll incidents. These employees need replacing, meaning incurring costs from recruitment, time spent interviewing and more spent training. Since turnover may increase due to payroll errors, this will lead to higher than projected costs, ruining your budget!
Aurion = Preventing Payroll Errors
Having Aurion manage your payroll means the piece of mind, it means no errors and it means satisfied employees. Manually calculating payroll leaves your business open to errors. Remove the risk entirely by joining up with Australia’s most trusted payroll solutions provider!