How to Avoid the Most Common Payroll Mistakes Small Businesses make ?

How to Avoid the Most Common Payroll Mistakes Small Businesses make ?

How to Avoid the Most Common Payroll Mistakes Small Businesses make ?

Sakcham Tiwari

How to Avoid the Most Common Payroll Mistakes Small Businesses make ?

Sakcham Tiwari

How to Avoid the Most Common Payroll Mistakes Small Businesses make ?

Sakcham Tiwari
payroll mistakes

Small business owners and managers often have their hands full with loads of tasks. And so, it is not uncommon for them to make mistakes while processing payroll.

To an outsider, it may seem like an easy task but those who have ever worked on payroll processing know that it is not at all easy.

Errors in payroll processing can lead to dire consequences. These consequences can include paying hefty fines and penalties, losing the trust of employees, and the reputation of the firm getting severely damaged. Therefore, avoiding payroll mistakes is absolutely essential for all small businesses.

Let’s discuss the most common mistakes that small businesses make when it comes to payroll processing:

  • Delay in payroll processing or not paying at all

Due to busy schedules or other problems in professional or personal lives, payroll processing can be delayed. So, delay in payroll processing means that the employees will not be paid their compensation on time. This can be incredibly frustrating for the employees and they might lose their trust in the company’s management.

It is not uncommon for businesses to completely forget to pay an employee or two. They might not be properly registered on the company’s records or their name gets overlooked or gets deleted somehow – any of these scenarios can lead to the employee not getting paid at all. This should be avoided at all costs as in such cases, the employee will not only be tempted to resign but the company’s reputation will also be tarnished among other employees and in the industry.

  • Improper Payroll set-up

If the payroll set-up is not up to mark, it can lead to numerous payroll mistakes. So, to avoid payroll mistakes, one should first check whether the payroll set-up has all the required aspects or not. A proper payroll setup must incorporate taxes, reimbursements, and employee classifications.

On occasions where the business is not registered, legal and statutory compliances are not considered properly, and employees are not classified correctly, the payroll is bound to be filled with errors. Moreover, penalties are also very likely to be levied by the tax authorities.

  • Not paying payroll taxes

The local, state and central governments all have various laws regarding taxes. Not all taxes are going to apply to your business. You need to check which ones do and when you are ready, you need to pay them timely.

However, plenty of businesses fail to pay taxes at the right time each year. Many of them are accused of tax fraud and have to pay huge amounts of penalties to the government.

Therefore, in order to avoid that, taxes need to be properly understood by small businesses. It is extremely important to figure out what taxes you need to pay and what you need to deduct from the payroll of your employees. This will ensure proper compliance to statutory requirements and help you to avoid payroll mistakes.

Contributions-Deductions-in-Payroll-01 (1)
  • Incorrect Payment

This is a payroll error that is extremely common among firms. that is, to pay the incorrect amount to their staff. Overpayments and underpayments are an issue everywhere in the world and even the top companies have made such mistakes.

Such situations damage the reputation of the company and it also loses trust and respect from its employees. Not to mention, it takes extra time and energy to resolve these issues and so, you get sidetracked from the important business tasks. Therefore, this error must be avoided at all costs.

  • Improper Records

If the records of your staff are not accurate, there are bound to be errors in payroll processing. Their bank account details, stipend details, tax information, statutory requirements, everything must be properly recorded so that payroll processing is accurate and smooth. In addition to this, make sure that payments and bonuses are also tracked properly. Salary slips of each employee must be kept safe because they can come in handy in future.

Small businesses must record all these details because it can help them steer clear of penalties when there is an inspection by tax authorities or any other government body.

  • Wrong employee classification

Companies may classify their employees incorrectly and this leads to incorrect payroll processing and payments. This happens more often than you’d think. Many companies hire independent contractors and gig workers apart from full-time employees. Many times, the firms mix up their employees belonging to different classifications.

This should not be taken lightly. Based on the employee classification, their salaries get reported to the tax authorities because they are taxed according to that. Moreover, governments have different laws and liable taxes for different types of employees.

Therefore, whenever a new employee is hired, it’s important to double-check their classification and see if it’s correctly entered in all records or not.

  • Overtime payments not paid

When you do not pay your employees for overtime, it is likely that they will get upset with you and may lose respect for you and the company. But apart from this, it is also illegal to not pay your employees for overtime. According to the guidelines set by the government in the form of labour laws, each employee must be paid for overtime. You will be fined by the authorities if you do not follow this.

Not keeping track of changing labour laws and tax regulations
Sometimes you do everything right like accurately processing payroll and paying the correct salary to every employee. Still, you get fined by the government and end up paying a large amount of money in the form of a penalty. Why does this happen?

Because you were not up to date with the government rules and regulations relating to payroll and tax. You thought you were doing everything right but you didn’t know about the updated laws. So, you ended up not adhering to the laws properly and thus, made things worse for the company. The company will not only have to pay hefty fines but its image will also be tarnished.

That is why it is of utmost importance to keep track of the laws set by the local, state and central government regarding payroll and taxes.

How Workex will help you avoid payroll mistakes

We covered a lot of common payroll mistakes that small businesses usually commit. Reading all these might have caused you a lot of stress. It is normal to stress about this but there is actually a way in which you can sit back and not worry at all about making these mistakes.

What is the way you ask?


A brief guide to Payroll challenges and their solutions in 2021.

A brief guide to Payroll challenges and their solutions in 2021.

A brief guide to Payroll challenges and their solutions in 2021

sanjna - suraj

A brief guide to Payroll challenges and their solutions in 2021

sanjna - suraj

A brief guide to Payroll challenges and their solutions in 2021

sanjna - suraj
payroll challenges

They say that love is more important than money. Have you ever tried to pay your employees payroll with hugs??

Funny isn’t it??

Payroll Management seems an easy task since it involves calculating hours worked, sending out paychecks, and updating records. For every business, whether small, medium, or large, payroll processing is a considerable expense and is accompanied with some serious payroll challenges as well. Thus ensuring that it is streamlined is essential. However, every organization encounters its unique set of payroll challenges when addressing payroll management.

What is payroll management?

Payroll management is the administration of financial reports relating to staff you are responsible for, such as remuneration, bonuses, deductions, and other financial records that should be audited regularly. Most of the time, the payroll management process involves a repetitive, irritating process that frequently results in mistakes. The process is made easier through the use of computers and software applications, which minimize the possibility of mistakes and thus avoiding some of the payroll challenges.


Here are a few setbacks and payroll challenges that HR industry encounters:

Time-Consuming Process:
Payroll is a tedious and highly time-consuming process, even if a business has the right technology platform to process payroll successfully. As a result, a significant amount of time is spent calculating wages and deductions, not to mention dealing with garnishments and levies.

Manual Payroll Processing:
Many businesses choose to manage their payroll functions internally and manually to avoid any upfront investments in high-cost platforms. However, manually entering employee data/records and doing manual calculations make the payroll process prone to even more errors. Further, it gives rise to possible issues like duplication of records, which could lead to an employee being paid twice for the same payroll cycle and therefore can result in even bigger problems for the organization. Further, not using any form of technology platform results in process redundancies and inefficiencies which lead to wasted time and money, as well as frustrated staff members.

New Hires:
As soon as an employee starts a new job, the payroll department of the company must monitor the employee’s previous employment history so that the new employer can tax them correctly. When an employee leaves their previous workplace, their Full & Final Settlement provides the necessary tax calculation information. In the absence of that information, the employee must pay the difference when they file their tax return.

When an employee leaves their business, they are expected to provide payroll with the same proof documents so that the company can verify investment figures and calculate taxes. Furthermore, departing employees can’t take advantage of any tax benefits or exemptions without proof documents. As a result, they will be taxed on the standard rate.

Keeping Up with Regulatory Changes:
Payroll regulations are dynamic and are updated regularly. Since the Covid 19 pandemic, labor laws, and wage laws have been updated, which need to be kept in mind while doing the payroll. Payroll has become more susceptible to error and risk since COVID-19 came into effect, as new regulations impacted payroll, making payroll more vulnerable to error. By transforming pay, organizations can stay ahead of regulatory changes, audits, and compliance.

To avoid payroll issues that occur because of regulatory changes, business owners should always stay updated on any changes occurring in their particular state or on a federal level that may impact them.

Safety and Security Concerns:
Security is a major challenge when it comes to maintaining confidential employee information in cumbersome spreadsheets. Payroll frauds can be committed in various forms, such as false wages and commissions, faking injuries to claim insurance or having ghost employees. Manual payroll processing steps increases the chance of such data mishandling and leakage of information leading to multiple issues for businesses. These kinds of payroll issues especially happen when there are no internal controls or when employees have access to critical components of the payroll software.

Dependence on Multiple Payroll Input Sources:
Another common challenge in payroll management is the non-compatibility of payroll management software. For example, the software used for keeping employee records may be completely different from the one that you use for leave management, performance, or employee benefits.

Insufficient or excessive payments:
Individuals do not like to be underpaid for work—or asked to return money if they accidentally overpaid. If you don’t correct errors quickly, you will have to do time-consuming year-end processing or refunds the following year. Automation will minimize the chances of human error where manual data entry is involved. If an error is discovered, let the employee know as soon as possible, so they can correct it without undue hardship.

Payroll fraud:
Businesses are vulnerable to payroll fraud, which may include employees falsifying their timecards or inputting lower-paying shifts. The best defense against fraud is using payroll software that helps you run reports across various departments and analyze data for suspicious trends.

Technology adoption:
New technologies make every process easier, including payroll processing, but companies are slow to adopt new technologies, which leads to the misallocation of funds destined for other planning and goals.

Management of Employees:
With the growing popularity of remote working, it is challenging to manage employees from different places. HR faces a lot of payroll challenges with keeping track of employees and managing attendance as well as keeping track of hours worked and other details. Payroll can be easily done with free software or cloud-based platforms if your company is just getting started. However, it becomes difficult as the business grows, so it’s better to adapt to new technologies like payroll outsourcing or even bringing in specialized payroll staff.

What is the solution?

Managing payroll in any organization can be challenging, but using an automated system is the best solution to the problem. Managing payroll involves a wide range of activities, which help an organization to maintain control over its most critical asset – its people. Done manually, or with outdated methods or spreadsheets, payroll becomes time-consuming, inaccurate, and complex. Payroll software or outsourcing makes payroll simpler. From getting payroll ready to close out the pay period, good payroll software keeps the process organized, easy, and efficient.

How Workex’s automated payroll software can help you overcome these challenges?

Manual calculation of Payroll is a tedious and time-consuming process. There is a great deal of attention & detail involved with everything from processing leaves to keeping track of overtime of each and every employee.

Whether you are seeking a better way to streamline payroll processing or are looking for a perfect partnering option, we’re here to help. Workex enables you to relieve a load of payroll administration by making the entire process enjoyable and easy.

Workex’s payroll management software eliminates payroll challenges and processing complications, and it delivers the following benefits:

  • Manage Attendance, Leaves & Overtime
  • Automatic Payroll Calculation
  • Dedicated Call & Chat Support
  • HR & Payroll Support
  • Statutory & Labour Compliance
  • Contact us to get more information about the same!


Basic Payroll Processing Steps: A Beginners Guide.

Basic Payroll Processing Steps: A Beginners Guide.

Basic Payroll Processing Steps: A Beginners Guide

Sakcham Tiwari

Basic Payroll Processing Steps: A Beginners Guide

Sakcham Tiwari

Basic Payroll Processing Steps: A Beginners Guide

Sakcham Tiwari
payroll processing steps

Payroll processing is one of the most important tasks in any business. If not taken seriously, mistakes are bound to happen in payroll processing steps. This can be a serious problem for the employees who are waiting for their salaries at the end of the month.

It is essential that there are no irregularities in payroll processing. If the payout of the employees are delayed, they can lose their trust in the company’s management as it directly impacts their livelihood. When employees lose trust, they lose their motivation to work properly, which leads to disengagement. This, in turn, can be detrimental to the business objectives of the firm.

In order to avoid such problems, we are going to provide you with all the necessary information regarding payroll along with all the payroll processing steps. This will help you in making minimal mistakes when it comes to payroll processing.

What is payroll?

Payroll refers to the total amount of money paid to the employees by the employer and as a business function, it involves the following:

  • Developing organization pay policy including flexible benefits, leave encashment policy, etc.
  • Gathering other payroll inputs
  • Defining payslip components like basic, variable pay, HRA, DA, CA, etc.
  • The actual calculation of gross salary along with statutory and non-statutory deductions.
  • Paying the employee
  • Depositing dues such as TDS, EPF, etc. and filing returns

Thus, payroll processing involves arriving at the ‘net pay’ of the employees after adjustment of taxes and other deductions. It is necessary to plan the payroll process step-by-step so that the payroll of employees can be managed efficiently. The formula for calculating net pay is given below:

Net pay = Gross income – Gross deduction


Gross income salary = All types of regular income + allowances + any one-time payment or benefit

Gross deduction = All types of regular deductions + statutory deductions + any one-time deductions

Stages of Processing Payroll

The person in charge of processing payroll must conduct careful planning before actually sitting down to process payroll. For processing payroll, constant monitoring of changes to withholdings, contribution to social security funds, etc. is required. This entire process can be divided into three stages:

  • Pre-payroll process,
  • Actual payroll processing and calculation, and
  • Post-payroll process.
payroll processing steps

Now let’s go through each stage one-by-one:

Stage 1: Pre-Payroll Process:

  • Defining payroll policy:
    This is the first step among all the payroll processing steps where you are required to establish policies for the payroll process. These policies will need to be approved by the management to turn them into standards. Some examples of such policies are pay policy, leave and benefits policy, attendance, policy, etc.Apart from the payroll policy, payroll cycle and payout attendance cycle also needs to be defined as part of the pre-payroll process. They have a direct impact on the payroll policy.
  • Gathering inputs:
    The next step in the process is gathering inputs from various departments of your organization so that the payroll calculated is accurate. Below are the data inputs that you may need to ask from various departments:
    Collecting all this data may be overwhelming to you so, you must use payroll software which comes with features like leave and attendance management, ESS (Employee Self Service portal), and much more. Using such software will make the payroll process much easier for the HR department




HR team

Finance team

Leave and attendance systems

General service providers

Income tax declaration, facilities availed, and more.

Salary structure, eligibility for benefits, etc.

Deduction for recoveries etc.

Data from attendance systems, current work shift, etc.

Transport service provider, canteen vendor, etc.

  • Input validation

After collecting all the required data for the payroll processing, you will need to verify the validity of the collected data. This step is highly important because a small error at this stage can sabotage your entire payroll process. Here is how you can validate the data:

  1. Making sure that the list contains all active employees and it should not have any employees who are no longer with the company.
  2. Checking that the data is adhering to the company policy.
  3. Ensuring that the data collected is in the right format.

Now you are ready to move on to the 2nd stage of the payroll process.

Stage 2: Actual payroll processing steps
  • Payroll calculation
    After the verification of the gathered data, you can now enter it into the payroll system. The results obtained will be equal to the net pay of the employees after adjusting the necessary taxes and deductions. This step requires you to recheck the process so that there is no chance of making a mistake.A payroll system is a software that automates the payroll process. You can integrate such systems with leave and attendance tracking systems and employee self-service portal. These systems are responsible for keeping track of employee’s working hours, calculating their salaries, calculating taxes and deductions, printing payslips, and more.
    Using a payroll system saves a lot of your time, enabling you to focus your time and energy on your business goals.

Stage 3: Post-payroll process

  • Statutory compliance

The payroll administrator must strictly adhere to the statutory compliances when conducting payroll processing. There are numerous statutory deductions such as EPF, TDS, ESI, and more, that can be deducted from the payroll of employees. These deductions are supposed to be paid to the respective authorities or government agencies.

  • Payroll accounting

Your company must be maintaining an accurate book of accounts and the net salary paid to the employees should be one of the most critical entries in it. Hence, the entering of salary data into the accounting or ERP system should be a part of the post-payroll process and ensure that no data is left or wrongly entered.

  • Payout

Now that you have completed all the steps mentioned above, it is time to finally pay your employees, their net salary amounts. You can pay them through cash, cheque, or bank transfers. Make sure that you are maintaining salary accounts of your employees for convenient payouts.

  • Reporting

The final task in the payroll processing steps is preparing accurate reports that will have information about the employees’ payroll such as department or location-wise employee cost. After the reports are prepared, they need to be sent to the finance department or to the management team so that they can be analysed further and cross-checked.

These are all the payroll processing steps required in any organisation and if followed correctly, it will be fairly easier to manage the payroll of your company.

Payroll Handling Methods

There are 3 possible options for managing the payroll of your organisation and they are as follows:

  • Excel based payroll management
  • Using payroll software
  • Payroll outsourcing

Excel based payroll management

There are many small businesses, start-ups or organisations with a handful of employees that choose excel based payroll management. Excel based payroll management is carried out on Microsoft Excel spreadsheets with the help of standard payroll calculation template. There are pre-set mathematical formulas that are supposed to aid the payroll officer for managing the payroll of the employees.

Using payroll software

As we have mentioned earlier, using payroll software is a great option as it saves up a lot of time and makes the job of payroll officer a lot easier.

For successful processing of payroll, it is necessary to make sure that payroll inputs are being properly gathered from every source. Manually gathering inputs can be prone to errors but using a software can be immensely helpful. There are several payroll management software available in the market for you to choose from.

These software not only automate payroll computation but also act as a platform for leave and attendance management, employee self-service portal, and HR management platform.

Payroll outsourcing

There is also an option of outsourcing payroll which refers to taking the help of an external agency for managing your payroll processing steps. Organizations who cannot afford a payroll officer or someone to process their payroll, go for this method.

Firms can provide data such as attendance, leaves, payment details, and more to a payroll service provider. On receiving this data, the payroll service provider will compute the payroll of each employee while taking into account statutory deductions.

Need help in managing your payroll? Choose Workex.

Managing payroll can be a hectic task and can take up a lot of your valuable time and budget which you can otherwise spend in achieving your business goals. Lucky for you, Workex is here to help you with that.

At Workex, we provide payroll management services to organisations at a nominal fee. All you need to do is onboard all of your employees on our system. After this, we will take care of the attendance and leave tracking, filing taxes, and computing the payroll of your employees accordingly.

Thus, this will not only decrease the need of hiring a payroll officer but you are also guaranteed to get top-notch payroll processing services. So, what are you waiting for? Contact us immediately for more details and we will get back to you.


Hence, payroll management is a crucial task for any organization with employees to pay. However, it can be easily done if the steps mentioned in this guide are meticulously followed.

All you need is a payroll officer or someone who is competent enough to follow the payroll processing steps and you’re good to go. You can hire one through our amazing job portal at Workex or you can use our payroll management services.

Salary Negotiation Tips- How to Grab a Better Offer.

Salary Negotiation Tips- How to Grab a Better Offer.

Salary Negotiation Tips- How to Grab a Better Offer


Salary Negotiation Tips- How to Grab a Better Offer


Salary Negotiation Tips – How to Grab a Better Offer.

Salary Negotiation Tips

At the time of getting selected in any job interview, the next part is to accept the offer letter. At the time of accepting the offer letter, you need to check the salary offered to you.

Best Salary Negotiation Tips

If that is as per your skills then it is ok to accept that with a good heart. Else you need to follow some salary negotiation tips, which you have to keep in mind as well. Because salary negotiations are also very important to do in order to get the salary as per you.

Here are some tips to be followed:

  • Compare jobs: If you are having more than one job offer letter then compare that with each other. Research salaries also so that you will get the chance and the solid reason to negotiate. This is one of the salary negotiation tips to be followed and to be kept in mind.
  • Wait: You have to wait also in order to get the best deal in your hand. You need to check the salary requirement of every job offer and this is one of the best salary negotiation tips to be kept in mind so that you will not feel betrayed from any side.
  • Wait for the Appropriate Time: If you came to know what you should be earning, how do you go about getting it? Start with having patience when interviewing for a new position, do your best not to bring up compensation until the employer makes you an offer. Don’t goof up with the only demand that is salary. Don’t give a salary range if not asked to you by the employer. In this way, this is one of the salary negotiation tips to be followed.
  • Take Your Time: Once you have got the offer, you don’t need to accept or reject it on the spot rather make it simple that you need to think over it again and told them that if they can increase in the original offer. This is one of the salary negotiation tips.
  • Negotiate benefits also: If you are getting any perks and benefits try to negotiate in that way also. So that you will be having a good character towards the employer that you actually knows everything about the benefits offered by the company.
  • Be sure your performance merits a raise before you ask for one.:  If you are planning for negotiating for a bump in your current salary, be sure you can show that it’s warranted. Now a day’s one of the biggest mistakes that can ruin a salary negotiation is not having proof that you’re indispensable to your organization. Be sure with this first and then take any decision further.
  • Don’t share your current salary if you are still on your current job: It is very common for recruiters to ask that what you’re making at the moment and what you’re grabbing for in terms of compensation in your next new job. Just don’t answer this directly, and don’t say this during salary negotiation. 
  • Let them know you want to accept the offer: Just negotiate the offer once and then you have to notice the gestures of the employer and at the end close up it with accepting the offer. If they don’t want to negotiate the salary then try to convince them with your skills and finally ends up accepting the letter on that way.

In this way salary negotiation tips can be used effectively so that you can present your point of views as per you also.

3 Risky Ways to Negotiate a Higher Salary.

3 Risky Ways to Negotiate a Higher Salary.

3 Risky Ways to Negotiate a Higher Salary

sanjna - suraj
ways to negotiate salary

Ways to Negotiate Salary- The interview is that type of phase which is actually very precious for any individual’s life. That is the point where a person is heading towards the new job followed by a new career.

Ways to Negotiating a higher Salary is so Very Risky

After selecting in an interview, your next step is to look forward to the salary details you are offered for. If you get better offers then also you need to compare and choose accordingly.

How to negotiate a starting salary that is very important to understand and grasp. Individual must have many ways to negotiate a salary that should not affect your reputation as well.

Here are some ways which might be risky and you don’t need to follow that same:

  • Asking for more salary range at the beginning: In this context, this is one of the ways to negotiate salary is that asking for high range so that you will not feel ashamed of talking about the low salary showing your low standards. Many job candidates don’t prefer this trick they directly satisfy with employer’s offer.
  • Told them about better job offer: For showing that you are better than others and you are having better skills then you must have to tell them about the job offers you are already having. Competing job offers is one of the ways to negotiate salary in this way which may not give any negative image on the employer as well.
  • Connect with the company’s objective: In order to negotiate with the salary you will get in future try to connect it with the objective your company is having and how well you are skilled to fulfil that in future in any way. This is one of the ways to negotiate salary range. In this way it will seems logical as well for the company to give the high salary and you will get the benefits of high salary as well.

Other ways to negotiate a higher salary:

  • Job change: You must be willing to job change anytime if the employer is not ready to think upon your ways to negotiate salary. In this way you will have a good edge over the other companies as well to join near future.
  • Be confident: This is one of the ways to negotiate salary, which means that you are having a good courage to talk about the wills and the needs you are having.
  • Show that what you can do to the company: This is one of the ways to negotiate salary, showcase your talent and skills and in this way you will find it easy for any job search in future.

Instead of discussing about raising salary based on what you make now, keep the conversation focused on what the market is paying for people like you and to your skills. Showcase and frame any metric your negotiation partner uses—like percentage differences—as market value, re-focusing the discussion on hard dollars so that it will be clearer to the employer after listening to your words and intentions properly.

  • Don’t mention personal needs: Corporate are not having anything related to your personal needs so it’s better not to showcase that. You make a much better case to your boss that you’re worth more when you focus on your performance and achievements and to achieve a specific goal to be furnished.
  • Don’t think before countering: state your point logically so that it won’t look creepy to the employer as well. If employer saying no your salary offers then try to convince with logical explanations and represent in a better way.