Category: Accounting

Common Payroll Issues

Every business requires efficient payroll functions as malfunctions in it will only create havoc and misunderstanding in the workplace. Small business still have a manual pay roll system while big business invest in software packages that run their payroll automatically.

Whether it is manual or automated, there are hitches in the whole payroll function that is sometimes quite challenging and complicated and also you need to remember that even if you are using top of the line payroll software’s, common payroll problems still exist that need to be fixed.

Payroll can be biggest expense for a company, however, it’s complicated and error-prone. This lesson reviews the most common issues in payroll and explains how they can affect an employee’s pay.

Payroll Defined

While getting paid may seem straightforward, in reality, it’s complex and requires great attention to detail. Payroll may be defined as the list of employees a company provides wages to. Although, it may also be defined as the total sum of wages a company pays to its employees. In either case, when people talk about processing payroll, they are referring to calculating the payments for employees.

Payroll Issues

Since employee payments is often the biggest expense for a companies, processing payroll needs to be done with pinpoint accuracy. Even the smallest mistakes can be costly and take time to fix. In this lesson, we’ll go over the most common payroll issues and explain how each one can impact employee pay.

Processing Incorrect Information

One of the most common payroll issues involves processing inaccurate information. This can result in paying an employee the wrong amount. While we personally won’t complain about being paid a little extra, this is actually not good for the company as a whole because it results in financial losses that negatively affect the company’s bottom line. On the flip side, if employees are paid less than what they should be, it can cause employee dissatisfaction. Correcting these errors sometimes requires a lot rework and time.

Late Payments

Employees need to be paid on time. Period. When payroll is processed late it causes delays in employees getting paid. As you can imagine, this can be frustrating and as a result, could dampen morale and productivity.

Misclassifying Employees

There are many types of workers, including full-time employees, part-time employees, and independent contractors. Getting these classifications right is very important as they each have different tax requirements and are reported to the regulatory tax agency differently. If a full-time employee is misclassified as a contractor, for example, that employee may be denied certain company benefits, such as overtime, vacation pay, or company sponsored pension.

Regulatory Changes

There are a number of laws and regulations that affect how payroll must be processed. For instance, companies may need to follow certain tax, payment schedule, and record keeping requirements. When they fail to keep abreast about changing regulations, they risk not only noncompliance with the regulatory tax agency (which is serious), but they will also risk underpaying or overpaying the employees. As an example, say a law came into effect that cuts income tax by 5% for everyone. If the payroll team is not aware, employees will see no changes in their next paycheck even though the final amount should be higher.

Tracking Overtime

Another common issue in payroll is not accurately reporting or calculating overtime. Firstly, there are laws that usually require companies to pay its employees premium wages for overtime. Specific laws depend on where you live, how overtime is defined, and what the premium wages are (time-and-a-half, double-time, etc.). For instance, say an employee worked a total of 10 hours in overtime. This means that he may get paid 1.5 times his normal wage for the first 5 hours, and then get paid 2 times his normal wage for the next 5 hours. As you can see, it’s not easy! This leads us to the second problem, which is when overtime hours are not tracked and reported accurately. This results in employees either being underpaid or overpaid.

Managing absence:

Tracking an employee’s absence and sick leave is quite a challenging and ardent task. It is very important for employer to manage the resource wherever needed in case of long term or short term absence of employees.

This directly impacts the productivity and profits of the company or organization. Hence, it is advisable to have tracking system like punching system for example individual employee cards or finger prints of employees that stores information of the employees.

The most reliable is the latter one as no one except the employee will have to register their presence or absence for the day!

Avoiding errors and fraud:

Most of the employees are paid through their bank accounts. Hence, an error could cost the company dearly.

The payroll software needs to be linked with the banks that are operating or functioning appropriately.

In case the employee does not have account then advice the employee to open an account in bank that company has transactions regularly and it will help to transfer on timely manner. Also it will avoid gaps in the system.

Not withholding and paying taxes

I didn’t withhold payroll taxes for my first few employees. I didn’t have the knowledge to do it, nor did I have a system set up to do it for me. I would write checks, hand them out to my employees, and that was it. I was essentially paying my employees under the table.

That quickly changed when the father of one of my workers wanted to see his son’s pay stub. Well, there wasn’t a pay stub to show. I didn’t need to give employees a log of their pay and deductions because I wasn’t withholding payroll taxes.

When you pay employees, you must withhold, file, and remit taxes—it’s serious if you don’t. If you don’t pay payroll taxes, you may face IRS payroll tax penalties, criminal penalties, and imprisonment. The IRS can shut your business down.

Since my early days as an employer, I have learned a lot about running payroll. I fixed my early mistakes and found a way to run payroll legally. My early days even inspired me to found Patriot Software, which provides payroll software for small businesses.

Even though payroll taxes can be difficult to understand, entrepreneurs must find a way to handle them and avoid common payroll problems. The consequences are too great to ignore the taxes.

Classifying workers improperly

Some workers are independent contractors while others are employees. Mixing up the two types of workers can be a costly mistake.

You don’t have to pay a contractor minimum wage or overtime wages. Also, you don’t withhold employment taxes from their wages. If you misclassify an employee as a contractor, they might miss out on wages and governments miss out on tax revenues.

If you do misclassify a worker, you will have to pay both the employee and employer’s share of taxes, plus penalties and interest. You might also owe back wages to the employee.

How can you know if a worker is an independent contractor or an employee? The U.S. Department of Labor recommends using the six-part economic realities test.

If you aren’t sure how to classify a worker, you can file Form SS-8 to avoid misclassification payroll issues. When you file this form, you request an IRS determination of the worker’s status.

Technology Skills in Demand for Accounting Professionals

Accountants once spent their time doing manual entries and searching for mistakes, but that changed with the development of computer technology. In the digital era, accounting professionals can accomplish much more in much less time, and their focus has shifted toward analysis and consultation.

For employers in an improving hiring landscape, this places a premium on recruiting and retaining accountants with advanced technology skills. Among chief financial officers in the United States, 41% cite “keeping pace with changing technology” as the biggest pressure facing their accounting and finance departments

The Growing Importance of Technology in Accounting

Big data, analytics software, mobile devices, cloud computing, the “Internet of Things” and enterprise resource planning (ERP) systems are assuming larger roles in the practice of accounting. As organizations of all sizes embrace the insights provided by the new influx of data, technology is making it possible to better utilize resources, automate processes and turn information into guideposts for strategic decision-making.

Companies involved in the healthcare sector are also leveraging technology to comply with provisions of the federal Affordable Care Act (ACA). Mandates for converting to electronic medical records, along with robust systems upgrades, could result in unprecedented caches of financial data being available for analysis by accounting professionals.

Technology Skills for Accountants

If the role of technology in the accounting profession is growing, what specific skills are employers likely to seek in candidates? Let’s consider just a handful of tech-related attributes that could make individuals,

Accounting Tasks You Should Do Every Day

It’s easy to put off accounting tasks when you’re a small business owner; so many other items on your to-do list seem more pressing. But, attending to these tasks daily helps you find and fix issues such as cash shortages and inventory discrepancies in a timely manner, while it’s still relatively easy to track down who was involved and what happened. If you only tackle your accounting tasks monthly, you might not discover such issues for weeks, when it’s more difficult to figure out.

As your receipts, sales orders, bills and financial statements pile up, you’re missing out on the insights that up-to-date accounting gives you about the financial health of your business. In a blog entry for Bench, an online bookkeeping company, Brice Warnes writes, “When you look at your books, you want to know they reflect reality. If your bank account and your books don’t match up, you could end up spending money you don’t really have – or holding on to the money you could be investing in your business.”

Refresh your financial data.

Ideally, your accounting software automatically does this for you each day, syncing your bank and credit card feeds and the sales data from your POS system into your accounting software. If it doesn’t, you’ll need to do this manually. This gives you an up-to-date look at your accounts, showing you the money moving in and out of your business.

If your business accepts cash, reconcile it against receipts.

Doing this at the end of each day helps you discover cash shortages or overages in a timely manner, so you can figure out where the money went and identify errors or theft.

Review and reconcile transactions.

If your accounting software is connected to your bank and synced daily, there’s no need to wait for your monthly bank statement. Many accounting applications simplify reconciliation by suggesting matches, so all you have to do is review and approve them. Spending a little time on this task each day is easy and eliminates a grueling month-end chore. It’s also a good time to review pending transactions for any errors or abnormalities that may be cause for concern, so you can investigate potential issues promptly.

What to Expect When Studying Accounting

Accounting is a quickly growing field for international students who have been flocking to the United States to get a solid degree and experience in the field. Many times student go in blind, not knowing exactly what to expect from an accounting degree. So what should you expect when studying accounting?

Rigorous Coursework

Accounting is often considered to be one of the most intense college majors there is. Students are required to take very rigorous courses in a number of different subjects. In addition, the core coursework required in accounting can be daunting and takes much studying and preparation. Students are required to take courses in Mathematics, Economics, Business, and, of course, courses in accounting.

All accounting students are required to take courses in Algebra and Statistics in their first two years of study. These mathematic courses usually include College Algebra, Elementary Statistics and Business Statistics. As a student dives deeper into the major, they will come across many new math classes. Expect to take an introductory course to Calculus early in your studies, as well as Calculus 1 and 2 later.

International students have the opportunity to take several social science courses, but the only required social sciences courses are Economics I and Economics 2, which are usually taken in succession. The Economics 1 course deals with microeconomics, or the smaller economic issues and theories, while Economics 2 focuses on macroeconomics, or economics on a global or larger scale. If students are interested in future economics courses or different social sciences, they have the opportunity to take any course as an elective.

Time Management is Key

With some very intense coursework, students will find that their free time is limited. Studying accounting requires a large time commitment and as courses progress the workload required will only grow. International students need to keep a set schedule in order to be effective and efficient with their time. Students should set aside times for homework or studying each night and plan around their classes. The library will be a haven for many accounting students who are looking for a quiet place to study. Outside of studying and courses, students should set apart some time for themselves to unwind from the tough coursework

Checklists to Optimize Your Accounting Processes

Accounting processes from invoicing to reporting

Businesses of all sizes have to deal with accounting and it can be a bit difficult if you’re new to it. Without an effective accounts receivable process, you risk losing out on valuable revenue. If you don’t put a process in place for your accounts payable then you could be facing late payment charges or even opening up space for fraud.

Using the checklists

You don’t need to be a CPA to create a balance sheet or an invoice. Our checklists enable anyone to perform accounting activities, and as you go through you’ll see the different steps explained where necessary. This way, you know what you’re doing and why you’re doing it.

A lot of accounting work is knowing what the necessary process is and being able to follow it effectively. The processes we have listed here range from onboarding accounting staff to invoicing clients, to bank reconciliation and end of year reporting.

Onboarding new employees in any area requires a clear process focused on fitting the new hire into the company’s culture and operations. Running effective staff onboarding results in higher productivity, better team morale, and enviable employee retention rates.

There are also tasks to review your employee’s knowledge on the specific areas they’ll be working on, with time set aside for learning. Plus, importance is granted to getting your new hire working well with all the internal systems which keep your company ticking over.

Accountant Resume Samples That’ll Make Your Application Count

As an accountant, you want to stand out while communicating dependability and attention to detail first and foremost. For this reason, flashy resume templates are a big no-go in the world of accounting resumes. Each of the accountant resume samples below sports a minimalistic template that implies these qualities.

The language you use in your resume is equally important. It needs to be exact, straight to the point, and contain all the important keywords. These resume samples contain key phrases we’ve extracted from over 400k resumes created using Kickresume.

In designing these resume samples we’ve paid most attention to their structure and formatting. Each of the individual sections is divided into bullet points, which facilitates easy reading. After all, your resume only has 6 seconds to leave a lasting impression. A well-structured resume ensures your professional qualities get the attention they deserve.

Student Accountant Resume Sample

This resume sample exemplifies what an accounting student resume should look like. At this point in your career, you probably don’t have much experience to show. For this reason, the education and skills sections dominate this resume. Each of the two is quite extensive and describes in detail what skills did the candidate acquire and how. Finally, when you cannot depend on previous experience, related extracurricular activities can help support your candidacy too.

Accounting Specialist Resume Example

When you’re applying for an accounting position, you need a very strong resume. Once you’ve acquired two or more years of professional experience, the only remaining challenge is to articulate it well on a resume. Notice how this resume opens with a professional summary. In doing this, it it allows hiring managers to immediately find what they want to see. In this resume sample, we’ve put the education section right after the profile. Although it’s not a mistake, you might want to consider putting it below your work history section. After all, two years into your career education becomes less relevant.