15760 Ventura Blvd, Suite 610 Encino, CA 91436
15760 Ventura Blvd, Suite 610 Encino, CA 91436
Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Three Common Payroll Mistakes to Avoid

Close up of payslip

Many companies handle their own payroll. Since they do not specialize in payroll, they often make mistakes. These mistakes are less likely with payroll services Los Angeles. If you notice that you are making them, your company might be at risk. The following are three common mistakes to avoid.

1 – Classifying Employees as Independent Contractors
When you hire an employee, it is important to classify them properly. Most people that work for you will be employees. This means they receive benefits and are subject to taxes. If an employee is an independent contractor, they do not receive benefits. They also pay taxes on their own. If you misclassify employees that work for your company, you might have tax liabilities. Therefore, it might be smart to work with payroll services Los Angeles to ensure that your workers are properly classified as far as taxes are concerned.

2 – Failing to Issue 1099s
At the beginning of each year, you are required to issue 1099s to any vendor or independent contractor that you paid over $600. If you paid a corporation more than $600, then you do not have to worry about issuing a 1099. However, you should make sure to issue one to everyone else that you worked with. Failing to do so can result in penalties.

3 – Not Including Gifts, Awards, or Prizes as Part of an Employee’s Income
Whenever you give an employee any type of gift, award, or prize, the market value of these things should be added to their income. These are subject to taxes. If you are not sure how to include these as part of an employee’s income, you can work with payroll services Los Angeles. This will ensure that you are fully transparent in your payroll practices, minimizing the risk of an audit.

If you have questions about payroll, it is important to work with payroll experts. They can ensure that you avoid payroll mistakes and also help you pay your employees on time.