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Common Payroll & Hr System Mistakes That Start-ups Need To Avoid?

By Author: acreaty management consultant
Total Articles: 14

A startup is no startup if it cannot break the unconventional rules to create a new story of success. Pumped with the desire to win the world, startups have to manage everything in their whole little arena to invite success and long lasting glory. Still in many instances, the occurrence of HR and payroll mistakes is quite evident in any business, no matter whether it is small or big organization. Being a startup, one needs to be extra careful in customizing payroll and HR functions to avoid serious legal and financial troubles in future. With that in mind, we have listed 5 common payroll and HR mistakes that businesses should avoid in order to prosper. Have a look at them!
1. The BIG mumbo-jumbo of personal and business finances
Do you think it is pointless to have a separate business bank account during the initial days of your business? If yes, then you are highly mistaken! It is difficult for brand new companies to make money or profit but in any case, a separate bank account is recommended for better financial clarity. Don’t have a short term vision for your financial stature, simply when you can create a working setup for streamlining your expenses and payback taxes. Even if your company faces a future crisis, a separate business bank handle will save your personal savings from public scrutiny.
2. The misclassification of employees:
The misclassification of employees as independent contractors can turn out to a BIG costly mistake. Most of the startups commit this goof-up in order to avoid the payment of taxes, reduce overtime cost of the employees and cancel insurance to such contractors.
3. The attempt of mixing payroll with compliance
According to a popular report, 1 out of 3 businesses faces IRS penalties because they are unable to avoid some common payroll mistakes. The complexity of managing payroll is high as payroll is not an easy nut to crack. Taking care of quarterly tax withholdings at all three levels i.e. local, state and federal is a full-time job and apart from this, startups still need compliance to keep a note for things like worker’s compensation, EPLI, unemployment insurance, etc. They can also choose to outsource their HR functions to dedicated payroll services.
4. Mismanagement in paying employee’s benefits:
Paying good amount of employee’s benefit is the best way to attract top-tier talents, especially technical professionals who are looking for some excellent healthcare benefits. However, such healthcare plans are overtly expensive and as a startup, you cannot drain your major expenses in luring employees with best facilities. Go for a bargain deal where you can offer a collective package to the employees. For instance, get a package that can offer savings on medical, dental, vision and 401(K) plans. Lessen the burden of extensive paperwork for employees to give them an extra dose of help.
5. Frustrating employees in ambiguity:
There is a lot of ambiguity in handling comprehensive software and paperwork that no employee would do for you in a happy state. So if you are frustrating your new team with unnecessary paperwork or payroll software then it is not only hampering your fast-moving startup but is also distracting your team from the core working routine. It is better to automate the HR and payroll related tasks (for instance outsourcing work to professional payroll services) than disturbing the employees. With this, you can easily avoid the manual filling to tax or compliance forms.

Visit for more info:- http://www.acreaty.com/employee/joining-kit.html

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