Want to cut your payroll errors and avoid expensive IRS penalties?
Here's the truth…
Payroll mistakes cost U.S. businesses $2.8 billion in IRS penalties every year. Even more alarming, 33% of employers make payroll errors that are easily avoidable.
Here's the deal:
Manual, outdated payroll processing is the norm in most companies.
Here's the solution:
E-filing technology is taking payroll accuracy to the next level and businesses that have made the switch are seeing significant improvements in both accuracy and efficiency.
What you'll learn:
- Why E-Filing Technology Is Game-Changing For Payroll
- The Hidden Costs Of Manual Payroll Processing
- How Modern E-Filing Systems Reduce Errors
- Choosing The Right E-Filing Solution
Why E-Filing Technology Is Game-Changing For Payroll
The term E-Filing Technology is no longer just about submitting a form electronically. When it comes to payroll, modern e-filing software is really an all-in-one payroll calculation system that automates, validates and error checks everything before you even hit submit.
Here's the thing:
It directly integrates into your existing payroll workflow. It will automatically pull employee information and calculate withholdings accurately in a way that even an experienced human resources employee or bookkeeper cannot manually match.
Calculating withholding on a manual basis is not just a math error possibility. You have to factor in the correct year's tax rates and mathematically calculating that is just the beginning.
When manually entering data you also have to consider possible errors with each data point entered. Changes in information like a change of address, direct deposit or a new W-4 need to be caught manually. Deductions and garnishments can become erroneous for all sorts of reasons and tax laws change every year.
With advanced E-Filer software you get:
- Automatic tax calculations with real-time updating tax rates
- In-built error validation that prevents incorrect submissions
- Automated integration with payroll systems
- Real-time compliance with regulatory requirements
Payroll accuracy has never been this easy.
The Hidden Costs Of Manual Payroll Processing
But here's what most employers don't realize…
The true cost of payroll errors goes way beyond those glaring penalties and those deductions that need to be added back in the next pay period.
If your employees are receiving incorrect paychecks, then you are creating a trust and compliance problem with your workforce.
Did you know that 50% of employees will actively start looking for another job if they experience just two payroll errors?
The IRS has specific requirements for payroll reporting and if there are discrepancies, then they can trigger an audit. We're not talking hundreds or thousands here. We're talking potentially tens of thousands in professional fees and lost productivity time.
Imagine if you have a payroll error rate of just 1.2% per pay period. 1.2% does not seem like a lot, but if your average earnings are $900 for 100 employees on each of 26 pay periods each year, you could be losing $56,647 per year as a result of payroll mistakes.
Then there's also the time and resources spent fixing errors rather than focusing on improving your business and the associated costs with that.
How Modern E-Filing Systems Reduce Errors
Ok, now you see why modern e-filing technology is so effective at reducing payroll errors?
Automation and validation.
This is how the best systems work:
Modern payroll e-filing systems will actively validate information in real-time against current tax tables and employee records. They will compare and verify and if something is out of whack they will flag it before you submit anything to the IRS.
IRS tax rates and requirements change constantly and new regulations can come into effect any month of the year. E-filing systems will automatically update all tax calculations based on the latest IRS guidance with little to no input from you.
The best payroll e-filing solutions also integrate directly with existing HR and accounting systems with no need for manual data entry in between. This means every transaction, calculation and submission is automatically logged so you can see exactly what was paid and when.
Compliance Made Simple
You'll be surprised to hear this…
The IRS now requires electronic filing for businesses that file 10 or more information returns per year.
That's right, 10 or more.
Previously the limit was 250 or more, but the IRS has lowered that requirement dramatically. This change, in conjunction with the requirement to e-file W-2s and the 1099 series forms, employment tax returns and withholding statements effectively means most businesses must use e-filing.
The good news is that e-filing solutions take care of all of these compliance burdens for you automatically, so you don't have to worry.
Non-compliance is just too expensive for most businesses. The penalties may be large but the IRS scrutiny of your entire payroll operation if you are not e-filing can be disastrous.
Choosing The Right E-Filing Solution
Payroll e-filing systems are not all the same.
Here's what to look for:
Your system should be able to accurately process federal, state and local taxes with an intuitive user interface that prioritizes user-friendly and easy navigation. It should also balance out a powerful set of features without being overwhelming to use.
Make sure your e-filing system integrates with your existing payroll, HR and accounting systems seamlessly with an emphasis on real-time data syncing. Verify that your e-filing provider has responsive technical support, robust security measures and a proven track record with businesses similar in size to your own.
Payroll and tax compliance is not optional. These features are non-negotiable and essential for you to remain accurate and compliant.
The Bottom Line Impact
When done correctly, switching to e-filing technology yields measurable returns on investment.
You will spend less time on administrative tasks. You will spend more time being able to concentrate on strategic initiatives. Your employees will be confident in the accuracy of their paychecks. This means improved employee morale and a much higher retention rate.
And you will be able to sleep well at night knowing your payroll is accurately and compliantly being processed by systems that are always up to date with the latest changes.
Making The Switch
Switching to e-filing technology and systems doesn't have to be difficult.
First of all, you must assess your current payroll error rate, as well as the real cost of these mistakes. This should include both the direct costs, like the penalties and the additions or subtractions that have to be added back into the next payroll.
It also has to include all the indirect costs, such as time spent administratively fixing problems and employee turnover that is linked to payroll mistakes.
Then it's time to do your research. Compare out different solutions, including looking at system integrations with your existing tech stack and what features are most important for your business.
The most important thing:
You have to choose a provider with an established reputation in payroll compliance and the technical knowledge and expertise to support your implementation.
Wrapping It Up
E-filing technology is changing the game for payroll accuracy. By automating calculations, validating data and staying compliant, e-filing solutions are solving the massive problem of payroll mistakes that can occur in manual processes.
You are no longer asking the question of whether or not you can afford e-filing technology. You are asking whether or not you can afford NOT to implement e-filing technology.
With payroll errors costing American companies millions in IRS penalties each year, with employee trust and compliance on the line, the ROI of accurate, automated payroll processing is self-explanatory.
To recap:
- E-filing technology is changing the game for payroll accuracy
- Automation and data validation is where the most success is found
- The indirect cost of manual processing is much higher than most employers realize
- Switching to e-filing technology and solutions is very straightforward
