The payroll process is often considered high risk for any business, especially if the right tools and resources are not used. Besides, businesses must comply with tax regulations and laws, which can further complicate the payroll process. Thus, errors may sometimes creep in. However, this can be distressing for employees and expensive for the business. To steer clear of these problems, it helps to learn about the common payroll errors and how to avoid them.

Wrong classification of employees
This payroll blunder has been committed by small as well as large businesses. Sometimes, they end up misclassifying an employee, leading to major errors in their payroll. For example, a person is classified as an independent contractor instead of permanent employee, or they may not be classified to receive overtime, when in fact they are. Such misclassification can easily lead to serious payroll errors. The solution to avoid this is to use an automated payroll service or software instead of manually completing the process.

Miscalculation of payroll
Another common error that has been observed is miscalculating the payroll. This mainly occurs due to the misclassification of employees. Aside from this, there are other reasons why miscalculation may happen.

Overpaying or underpaying employees.
Making retroactive payments by mistake.
Not paying the first paycheck for new hires.
Deducting the wrong amount for benefits or other miscellaneous payroll deductions.
Incorrectly paying employees who are on disability or other leaves.

Whatever might be the reason for the miscalculation, it can cause a lot of frustration for the employees, especially when it involves missed payment. Subsequently, the business has to dedicate several hours or even days to look into why the error occurred and then correct it. Most of the time, miscalculation errors are avoidable when a business uses automated online tools. Yet, if errors do occur, a business needs to take the necessary steps to rectify it and send a payroll error email or letter to the employee explaining why the error happened and how it is being resolved.