Five Steps to Prevent Payroll Fraud

Payroll Fraud:

Payroll fraud is not easy to detect and it can takes several forms. A company’s payroll services can be affected with the following three schemes:

Falsified Wages:

This type of fraud is very common in payroll service departments. It occurs when the employees misuse the system to increase their wages. They can also add extra hours that were not actually worked. Click here to know when selecting a payroll company.

Ghost Employees:

Ghost employees don’t exist in reality. This type of payroll fraud is committed by adding a fictitious employee on the payroll of the company. The executor of this fraud then embezzles company funds in a way that by cashing in on the wages paid to that fictitious employee.

Commission Schemes:

Sales teams can dig holes in commission structure in a bad way. They can do so by inflating sales and falsifying other sales and purchase orders.

The above mentioned frauds are not very easy to detect but the following measures can help you a lot to avoid such frauds.

Five Steps to Prevent Payroll Fraud

5 steps to prevent payroll frauds:

Payroll outsourcing is one of the ways to avoid frauds. By implementing several internal controls you can minimize at least payroll frauds within your organizations.

1.Executive Approval of paychecks:

Executive’s approval is necessary in so many cases to avoid frauds. You must choose a person from your executive team whose approval to employee paychecks is final. Don’t forget to take approval for bonuses and other types of irregularly distributed compensations.

2.Restricted Payroll System Access:

There must be a restricted payroll system to avoid frauds. Everyone should not have access to the payroll system. The duties must be segregated. The reason is that, there would be less chances of committing fraud when the persons who record payroll information are not the same who approves and authorize the payments.

3.Surprise Payroll Audits:

Surprise payroll audits are very necessary to prevent frauds. Surprise audits are very effective and these can be applied to the area of payroll. Both external and internal payroll audits can prove effective in this regard. Auditors check any duplicate names, postal codes and addresses of the employees as they show the red flags for fraud. Auditors also ensure that the employee’s names mentioned on the payroll do indeed exist and they are also the employees of the company. Learn more about payroll audits.

4.Regular Review of payroll service providers:

Regular reviews are useful to find out the frauds. Try to reconcile the amounts paid to your payroll expenses. Also check the large one time payments. Whenever you check the financial statements of the company, at that time also review the payroll reports to find out anomalies.

5.Mandate Vacations:

Companies sometimes allow mandatory vacations to payroll and accounting personnel. This is a large way to uncover fraud. It allows other persons to step in to take over the payroll system and the new employees may find the red flags which lead to payroll fraud.

By improving payroll services and using the above mentioned preventive measures you can avoid payroll frauds.

Have You Accounted for Payroll Tax?

Knowing what payroll tax is and how to handle it can be a tricky situation for many businesses. Using payroll outsourcing can be a huge help in avoiding future payroll tax audits and in providing an extra layer of security to your pay system. Accounting for payroll tax can be a complicated process, and we hope to simplify it through this article.

Paying Attention to Payroll Tax

Being able to be aware of payroll tax is the first step to taking care of it. Many times, the simple fact that many businesses were unaware of it is what caused them to suffer later on and to be audited. Payroll services in Australia can be of great help here, as professionals will be able to offer you the insight and the tools you need in order to understand how to keep track of this tax and how to pay it.

Registration Requirements

In Australia, if your business pays out over a certain amount of money in a year, then it is considered that you have exceeded the payroll tax threshold and you will need to pay the government a portion of this income, usually somewhere around 5% of the total payroll for all of your employees. This includes all of the salaries, wages, bonuses and deductions for each employee as a total sum. Depending on the state that you are located in, rules will vary. However, the general rule is that you must enroll within a week after the end of the month when your business reached the payroll tax threshold and begin making payments soon thereafter. By working with a reliable payroll service, you can avoid a lot of complications and issues with this important task. More details!

Tips to Keep Payroll Tax Down

There are many ways in which businesses can help keep their payroll tax as low as possible beyond simply using payroll outsourcing. Here is a short list of ways that you can use personally to help keep your payroll tax down:

  • Use dividends

By using bonus and wage dividends instead of full wage and bonus packages. This is a great way to lower your payroll tax while still being able to reward your hard workers appropriately.

  • Be Aware

When you are doing your best to save your company money, it is important that you be personally aware of the payroll tax threshold and the time limit on payments. If you aren’t, you could end up relying entirely on someone else and they may or may not come through for you when needed.

  • Change Your Business Model

Changing the way that you do business can help you lower your payroll tax. This could involve reducing work hours and using independent contractors. This is very open ended and varies from business to business.

By using all of the tips and resources mentioned, you should be able to begin understanding payroll tax more thoroughly and to see changes that will help your business save money in the long term. By knowing all of the details involved, and working with a professional payroll service, your business will be on the way to success in no time. For more details, visit: https://www.forbes.com/sites/johntharvey/2019/08/22/three-reasons-to-be-in-favor-of-a-payroll-tax-cut/#53a802437a07