Payroll issues can happen anywhere, regardless if it’s for a small business or for a farmer. Here are five ways to solve payroll mistakes on the farm without having high penalties.

#1: Falling behind on paying taxes and filing

It’s crucial to stay on top of paying taxes and filing. Deadlines are just as important with payroll as it is with other important farm tasks. Missing deadlines can mean high penalties and interest charges, according to allbusiness.com. Figuring out when taxes are due, which could be monthly or biweekly, and keeping track of those dates will ensure a problem-free time when paying and filing taxes.

#2: Missing employees’ paydays

Everyone loves a payday. Employees’ paydays have deadlines too, so it’s crucial not to miss them. According to squareup.com, use a payroll service to avoid mistakes. It can be helpful in terms of deadline reminders and any possible mistakes. Also, it’s just as important to maintain confidentiality of the payroll information.

#3: Not keeping records 

Organization is key when dealing with payroll. Not keeping records or imputing numbers incorrectly, such as social security numbers, can result in costly fees from the government. However, don’t expect software to take care of all the work for you. According to allbusiness.com, don’t assume that the software can perform calculations without all of the necessary information. Treating the software as if the information is on paper is a good way to look at it. 

#4: Miscalculating overtime

While it varies state-to-state, overtime pay can become tricky. Following guidelines to determine the correct overtime pay is crucial to avoid any costly mistakes. Check with your state to see what the local and state wage and hours are to get an accurate amount. For example, according to the United States Department of Labor (DOL), in California, “any work in excess of eight hours in one workday, in excess of 40 hours in one workweek, or in the first eight hours worked on the seventh day of work in any one workweek shall be at the rate of one and one-half times the regular rate of pay.” Click here to see a guide of rules for each state. 

#5: Classifying workers incorrectly

To report payroll information correctly, proper employee classification is important. According to the Northeast Organic Farming Association of Vermont (NOFAVT), the general rule is to not classify workers as sub-contractors or casual labor if you use people to assist you with daily farming duties. The state and federal labor departments will consider them as employees. Types of workers can range from independent to temporary employees to consultants.

Note: The information presented here is not legal advice. Contact the U.S. Department of Labor or consult a lawyer or accountant for legal advice.