Payroll Risks And Compliance: How Employers Can Identify And Prevent Common Errors

Key Takeaways:

• Worker misclassification, payroll deduction errors, and compensation reporting issues are among the most common payroll compliance risks employers face.

• Effective payroll compliance requires coordination across HR, finance, tax, benefits, and payroll functions, along with ongoing reviews of processes and controls.

• Proactive payroll assessments can help organizations reduce risk, avoid penalties, and support major business events such as mergers, acquisitions, and IPOs.

Payroll in the U.S. is more than simply issuing paychecks at the end of a pay period. From a risk standpoint, U.S. payroll involves compliance with multiple federal, state, and local laws and regulations, as well as collaboration across business operations, including human resources (HR), finance, benefits, and tax. In fact, payroll can comprise one of the largest tax burdens for employers, even compared with income and sales taxes. Looking at payroll through an operational lens, it’s