5 ways small businesses mess up payroll

5 Ways Small Businesses Mess Up

Payroll

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1. Wrongly classifying employees as contractors

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If you, as the employer, have complete control over how, when, and where the work is

completed, then you actually have an employee.

2. Administering comp time vs. overtime

In the private sector, issuing compensatory or “comp” time in

lieu of overtime pay is illegal under federal law for nonexempt

employees.

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3. Forgetting to record paper checks

Failure to track and record all money going out can negatively impact your business cash flow.

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4. Overpaying for benefit packages

There are many insurance companies that provide special

consolidated benefits plans specifically for small business

owners.

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5. Failure to report vendor payments

You must get a completed IRS Form W-9 from every vendor and use this information at income tax preparation time to report to the

IRS any payments you made to any vendor in excess of $600 using

Form 1099.

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