10 Common Payroll Processing Mistakes to Avoid

Whether you manage your company’s payroll internally or you outsource to a payroll processing service, understanding the ins and outs of payroll is extremely important. In fact, no matter who does your processing, mistakes occurring internally can have a negative impact on payroll. It is important to be aware of these common payroll mistakes and know what you can do to avoid them.

10 Payroll Mistakes to Avoid

1. Assigning Only One Internal Person to Handle Payroll Processing

If you oversee your payroll internally, we recommend assigning more than one person to the job. Inova Payroll points out that “smaller companies can minimize fraud by ensuring that at least two people are involved in payroll processing.” While payroll fraud isn’t something you want to believe would ever occur at your company, it is still necessary to get out in front of the risk.

2. Printing Too Much Information on a Check

When it is time to print checks for your employees, keep the information printed to a minimum. For example, do not print full social security numbers on your checks. By only printing the data necessary to cash a check, you can avoid putting your employees at risk.

3. Not Applying Timely Payroll System Updates

When using an online payroll system to manage your data, you will want to ensure that it is always up to date. By running an older version of the software, “you may leave gaps in data storage and retrieval or provide the potential for security breaches” (Accountingtoday.com). Work with your IT team to ensure that your system is always updated in a timely manner.

4. Overlooking the Importance of a Secure Password Policy

How secure is your password? Even if you outsource your payroll, there are things you can do internally to protect your employees and their information. More specifically, you can implement a Secure Password Policy for your company. The Geek Stuff recommends creating passwords that are at least 8 characters long, utilize a mix of letters, numbers and special characters, and change them often.

5. Leaving Physical Data Laying Around

This may seem obvious but it still needs to be said. Sometimes we get so caught up in our work that we don’t pay attention to physical security. We recommend storing important physical payroll files in a locked room or cabinet. In addition, your company should incorporate document shredding into your company policy.

6. Not Outlining Clear and Concise Payroll Security Procedures

When managing payroll internally, make sure to outline clear and concise procedures for your employees. EPay Systems recommends your procedures “include training payroll employees on proper use of the payroll system on a regular basis.”

7. Ignoring the Importance of Computer Security

Did you know that in 2015 over half a billion personal records were stolen or lost due to data breaches (Symantec Corporation)? While computers keep us all connected and make most of our jobs a whole lot easier, they also put us at a unique risk for data breaches. In addition to implementing a Secure Password Policy, your company should have firewalls in place to protect important information.

8. Ignoring the Importance of Mobile Security

Like computer security, mobile security is also vital to protecting your data. Have a clear policy set for mobile access that lets employees know what information and which applications are okay to share and access on their mobile devices.

9. Putting Off Installing Anti-Virus Software

You can also protect important online data by installing anti-virus software. Common anti-virus software, such as Norton or McAfee, should be installed on all company computers (Quickbooks). Additionally, procedures should be put in place to make sure this software is always up to date.

10. Not Educating Employees on Phishing Scams

Phishing scams are any attempt to obtain sensitive information by disguising as a trustworthy entity in electronic communication. Oftentimes, people become susceptible to these scams because they aren’t even aware they exist. You can keep your staff up to date on the cyber issues or phishing scams by “creating a cyber-safety class for all employees” (On-timepayroll.com).

We understand that all of these rules and reminders can be overwhelming. At Future Systems, security and confidentiality are among our top priorities. If you are looking to outsource your payroll services to a safe, secure and reliable company, contact Future Systems today and let’s get started!

- Your Team at Future Systems