Table of Contents
Table of Contents
Payroll is an incredibly complex area of HR—getting it wrong can have serious financial costs and impact a company’s credibility greatly. This article brings together important payroll statistics from a variety of sources that illustrate everything from the impact of payroll errors to how payroll procedures are changing.
Read on to discover what our research can tell you about payroll trends and worker expectations, as well as important statistics to consider if you are thinking about changing your payroll practices.
Employees care about the accuracy and timeliness of their paycheck
Paychecks are, of course, the primary concern for most employees; the need to earn money is what drives them to work. If a paycheck is late or inaccurate, it can impact workers immensely, to the point that they might not be able to pay their household bills.
Employees, then, have little tolerance for payroll errors, and more than one error can cause many to consider leaving a company.
Paycheck errors are more common than you’d think
While many companies would like to think that payroll errors are few and far between, errors are a lot more common than people realize. Errors can vary in their cause and impact, but they often result in late payments or underpayments.
Payroll corrections are common, and they can take up a significant amount of time for HR departments or business owners.
Payroll mistakes can be costly
Payroll errors don’t just cost employee and business time to resolve or damage a business’s credibility and reputation. Even small payroll errors can have significant monetary costs, and frequent or larger errors cost even more still, potentially resulting in expensive litigation or tax penalties.
Running payroll is one of the most time-consuming tasks for small businesses
Processing payroll is complex. Accurately recording worker hours can be time-consuming, and all calculations must be thoroughly checked in order to avoid costly payroll mistakes.
Small business owners often underestimate the time involved in payroll, and larger businesses can see their HR departments swamped with questions about pay.
While some small businesses are using outdated payroll systems, many are turning to payroll technology
The variation seen in payroll practices is very broad and growing as technology progresses. Some companies still use outdated or manual payroll processes. Even those companies that adopted payroll technologies early on can find that their technology has quickly become outdated.
There is payroll technology available to suit every size of business, and many companies are planning to modernize their payroll processes or adopt cloud technologies.
Many small businesses outsource their payroll processes
Outsourcing payroll has its own cost, but it can be one way to ensure payroll is performed by an expert and that there are fewer payroll mistakes. Outsourcing can remove the headache of learning payroll practices and regulations and free up time for small business owners to concentrate on other aspects of running their business.
Having help with payroll decreases the risk of mistakes
Outsourcing to a payroll company or payroll expert, or even using the latest technology, can make payroll easier and reduce the number of payroll mistakes.
Payroll mistakes are often caused by manual or data input errors or inaccuracies in checking and verifying payroll information. An expert eye or the help of technology can frequently help spot mistakes before they become a paycheck problem.
The developing gig economy and rise of remote work are changing the way we do payroll
Business operations no longer look the way they did 30 years ago—or even 10 years ago. Employees can not only be on-site anywhere in the world, but they can also be working from their own homes, anywhere. The most agile businesses may have remote and gig workers in every corner of the globe, and they need to have the functionality to pay both periodically and by the project.
Payroll practices, functions, and technologies have all changed and will continue to change as the world of work progresses and transforms digitally.
How to Get Payroll Right
The statistics make it clear: payroll is an essential part of running a business, large or small, but it can also be time-consuming and costly. If you’re just getting started with payroll, here are a few things you can do to streamline the process and avoid expensive errors. Click the links to learn more!
- Understand payroll deductions. Payroll deductions are withheld from your workers’ gross pay, and they take home what’s left over. Involuntary deductions are required by law—one example is income tax. Voluntary deductions, such as 401(k) contributions, are up to the employee.
- Classify workers correctly. When hiring full-time or part-time employees, you must classify them as FLSA exempt (not entitled to overtime pay) or FLSA non-exempt (entitled to overtime pay). Misclassifying an employee can lead to serious consequences, including fines.
- Know the difference between contractors and employees. Recently, the IRS has created more guidelines around how independent contractors are defined. In this growing gig economy, you’ll face hefty penalties if you wrongly classify employees as contractors.
- Be aware of common payroll mistakes. It’s easier to avoid making payroll mistakes if you know what the most common ones are.
Ditch manual payroll processes. Eddy provides a better payroll solution for small businesses. With integrated time and PTO tracking, automated tax filings, and more, Eddy makes payroll simple. We do the heavy lifting so you don’t have to. Find out if Eddy Payroll is right for your business.
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