Paystub generation today is easier than it has even been in the past. A good range of software products simplifies the process and helps you avoid costly mistakes. Still, the risk of making errors does exist.
For a pay stub check to meet legal requirements and contain all essential information, you’ll need to focus on avoiding some of the most common mistakes employers make when dealing with payroll and calculating employee taxes or contributions.
Not Clearly Marking Payment Period
A paystub needs to contain two numbers pertaining to an employee’s payment – the amount that they’ve earned for the current pay period and the year-to-date earnings.
Some employers count on software products that don’t mark each of those payments clearly. As a result, a pay stub can be difficult to read. You don’t want employees to feel confused about the information that you’ve provided. Hence, a well-organized paystub should come with clear headers that clarify exactly what the specific number pertains to.
Tax Data Mistakes
This one isn’t an innocent error. Miscalculations and problems with tax deductions can lead to fines, which is why you have to make sure correct numbers are featured in the paystubs that you generate.
Local, state and federal tax regulations change all the time. Often, these changes affect percentages and different kinds of taxes. You have to keep yourself informed about such changes. Even if a paystub generator can automatically calculate tax deductions, it doesn’t get input on tax increases or decreases that the authorities have introduced.
Penalties can be avoided by fixing mistakes and correcting payment discrepancies if such have occurred. The time frame for such corrections varies by state, which is why you need to check with local authorities.
Data Entry Errors
Lots of mistakes fall under the data entry error umbrella. Even if a paystub generator can automate lots of the data entry, there are still some fields you’ll need to fill out personally the first time around. It’s possible to commit an error when entering information on:
- Employee name and personal details
- Company details
- Email address and address
- Pay rate
- Employee classification
- Vacation days and sick leave
All kinds of spelling mistakes are also common and while these seem innocent enough, they can cause problems.
Yes, it’s possible to miscalculate the amount a worker has earned over a certain pay period and it’s also possible for the year-to-date earnings to be incorrect.
Such errors occur due to various issues:
- Overpaying a worker
- Underpaying a worker
- Miscalculating overtime pay, vacation days and sick leave
- Failing to account for a first check that new employees have earned
- Miscalculating payroll deductions
- Miscalculating the amount you have to pay to employees who are on disability
Such errors can affect both salaries workers and those being paid for hourly work. These payroll errors affect your company and your workers alike, which is why you always want to double check the numbers (especially in a situation that features some of the special circumstances mentioned above).
Avoiding paystub errors takes patience, practice and good understanding of local regulations. If you’re just getting started with your business, chances are that you’ll face some of those issues. Being meticulous and even employing some professional assistance can help you deal with a steep learning curve. The same applies to doing your research and selecting the paystub generator that allows for enough personalization and that can also handle some of the most complex calculations.