From miscalculating taxable income to simple data entry errors, accounting mistakes can spell trouble for businesses all across Canada, which is why the need for sharp and reliable payroll administrators has never been higher.
These exceptionally trained professionals help businesses by exercising constant vigilance when performing calculations to make sure that employees are properly classified and payroll deductions are processed correctly. Their success, in large part, owes to their education and diligence in avoiding common accounting mistakes.
If you are looking to pursue a career as a payroll administrator, here are some of the most common accounting mishaps to safeguard against when you start working.
1. All New Payroll Admins Should Avoid Improperly Classifying Staff
Occasionally during the accounting process, some payroll administrators working for small businesses may accidentally mix up independent contractors with regular employees, or exempt and non-exempt workers.
As a result, business may fail to deduct the appropriate amount of taxes from their salary, which can lead to them having to pay penalties. Employees might also fail to receive the correct wages for their work, which can result in frustration among staff members.
Avoiding costly mistakes like this is simple, requiring diligence and focus on the part of the payroll administrator. For instance, an experienced professional with accounting training will know that independent contractors are not paid minimum or overtime wages, and be sure to bill them for the correct amount of hours they have worked.
2. Professionals with Accounting Training Avoid Mismanaging Payroll Deductions
Apart from misclassifying workers, graduates of accounting programs should take extra care to properly calculate Canadian payroll deductions for each employee after they become a payroll administrator. Not subtracting the appropriate amount from part-time and full-time employee salaries for each deduction could end up costing both the business and employee money. In fact, whenever a business fails to appropriately deduct the correct amount in taxes from a worker’s pay, the employee must pay the taxes owed to the federal and provincial government.
Payroll administrators can avoid these mistakes by ensuring that proper contributions are made to the CPP and the provincial pension plan, as well as paying EI premiums. There are also online tools that the CRA provides on their website that payroll administrators and accountants can use to double check their calculations, making sure that they calculate the appropriate amount of deductions for each worker.
3. Professional Payroll Administrators Should Avoid Miscalculating Overtime Wages
Common errors with miscalculating overtime wages could be in part due to the number of different labour laws in each province. A good rule of thumb is that an employee working more than 40 hours a week is entitled to overtime wages.
However, overtime wages would only apply to employees who are not exempt. For instance, in some cases management and supervisors may not be eligible to receive overtime. To avoid mistakes when calculating overtime wages, be sure to calculate the appropriate rates for each province. In many cases, the rate is usually 1.5 times, also known as “time and a half”, of the employee’s regular hourly wage.