Starting a business from scratch will require a lot of innovation, creativity and improvisation. If the competitor beats you to a product or service, you have to be one step ahead. However, there is one area where you don’t want to get improvisational – this is with your payroll system and human resources. If you don’t follow the rules, your young business may be in a lot of hot water, so it is important to know exactly what the guidelines and regulations are. More than that, though, you want to be aware of the common mistakes that some startups fall into, so that you can avoid those pitfalls. Here are some common HR and payroll mistakes that startups make.

  1. Not categorizing employee tax statuses. In a startup capacity, you will have a lot of employees that are only contracted workers – they may only have one task and then move on. Many startup businesses make the mistake of categorizing these employees as part-time or full-time employees, which can really confuse the payroll process, so make sure that you properly categorize your employees.
  2. Mixing business with personal finances. One of the biggest mistakes that new businesses make is using personal finances to pay for business related expenses. This can get especially troublesome when it comes to compensating employees. Not only will it make your business taxes more difficult to handle, but it will also make your human resource taxes more frustrating. There is a good chance that your new hires want to be paid out of the business coffers – not your own. As a business owner, it is important to not make this mistake.
  3. Not taking advantage of startup perks. When it comes to startup perks, there is a lot to take advantage of, especially in the capacity of payroll and HR. For one thing, small businesses can get tax breaks if they have a certain number of employees. Also, you can save money on medical and dental plans. In some states, you are required to offer your employees medical and dental benefits if you have a certain number of employees, so you want to do a little bit of research to make sure you are saving money but also covering your human resources.
  4. Doing payroll yourself. It is also important to hand the duties of payroll to a specialized accounting firm like Big Fish Payroll Service Inc. As a new business owner, there is a good chance that you have other, more important tasks to take care of. Plus, taking payroll off your shoulders will increase the accuracy of the process – the last thing you want is to undercut your employees on their paychecks.
  5. Not taking the time to hire the right personalities. When it comes to human resources, you want to make sure you hire a team that can work together and keep morale up. In the beginning stages of a business, this is especially important. This is why you want to really pay attention to the different personality types that you hire – the last thing you want is to hire a core team that clashes or doesn’t get along.

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