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5 Ways Small Businesses Mess Up Payroll ©2013 All Rights Reserved - Building Bridges Chicago LLC

5 ways small businesses mess up payroll

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5 critical mistakes small business owners and entrepreneurs make when preparing payroll. These tips help small business owners learn how to avoid messing up their payroll by keeping adequate records and accounting for vendor payments properly.

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Page 1: 5 ways small businesses mess up payroll

5 Ways Small Businesses Mess Up

Payroll

©2013 All Rights Reserved - Building Bridges Chicago LLC

http://www.buildingbridgeschicago.com/
Page 2: 5 ways small businesses mess up payroll

1. Wrongly classifying employees as contractors

©2013 All Rights Reserved - Building Bridges Chicago LLC

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

completed, then you actually have an employee.

http://www.buildingbridgeschicago.com/
Page 3: 5 ways small businesses mess up payroll

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.

©2013 All Rights Reserved - Building Bridges Chicago LLC

http://www.buildingbridgeschicago.com/
Page 4: 5 ways small businesses mess up payroll

3. Forgetting to record paper checks

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

©2013 All Rights Reserved - Building Bridges Chicago LLC

http://www.buildingbridgeschicago.com/
Page 5: 5 ways small businesses mess up payroll

4. Overpaying for benefit packages

There are many insurance companies that provide special

consolidated benefits plans specifically for small business

owners.

©2013 All Rights Reserved - Building Bridges Chicago LLC

http://www.buildingbridgeschicago.com/
Page 6: 5 ways small businesses mess up payroll

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.

©2013 All Rights Reserved - Building Bridges Chicago LLC

http://www.buildingbridgeschicago.com/
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