Payroll is not simply about processing numbers. It involves many factors, including hourly wages, allowances, bonuses, tax deductions, and insurance contributions.

In practice, multiple departments often handle Payroll data. This makes the information easier to contain errors. Therefore, businesses may face risks if they do not manage their process carefully.

According to Yomly, around 20% of Payroll processes have errors each year. These mistakes can affect company costs and employee trust. They may also reduce employees’ confidence in the organization.

Below are common Payroll errors that businesses should know to reduce risks and improve daily operations.

1. Inaccurate Timekeeping Data

Time management is the foundation of Payroll. However, errors often happen when time records are not updated or shared correctly between departments.

• Unverified or inconsistent timekeeping data.
• Failure to update employee statuses, such as annual leave, unpaid leave, statutory leave, or overtime.

Impact: These mistakes can lead to employee complaints. They may also reduce transparency and trust within the company.

2. Incorrect Payroll and Bonus Formulas

Each employee group may have different payment methods. Therefore, using the wrong formula can directly affect salary accuracy.

• Using incorrect formulas for basic salary, KPI payments, commissions, or temporary worker payments.
• Incorrectly adding allowances or deductions based on company policies.

Impact: Businesses may make overpayments or underpayments. As a result, financial checks and reports become more difficult.

3. Delayed Updates on Regulatory Changes

Salary policies and tax rules often change. Failing to update these changes on time can create compliance issues.

• Failure to update salary limits, regional minimum wages, or insurance contribution rules.
• Delayed updates to personal income tax (PIT) declarations and withholding based on new regulations.

Impact: Businesses may face fines or additional tax payments during inspections.

4. Incorrect Family Deduction Management

Family deduction is an important part of personal income tax management. Mistakes in this area can directly affect employees’ tax benefits.

• Missing or poorly managed dependent registration documents.
• Incorrectly applying the start or end date of family deductions.

Impact: Businesses may report incorrect tax obligations. Employees may also face problems during annual tax finalization.

5. Incorrect Classification of Taxable and Non-Taxable Income

Correct income classification helps businesses manage taxes properly. However, this remains one of the most common Payroll mistakes.

• Incorrect classification of allowances, bonuses, travel expenses, and employee benefits.
• Including non-taxable payments as taxable personal income.

Impact: Businesses may lose opportunities to optimize legal costs. They may also submit inaccurate tax reports.

6. Errors in Tax Adjustment and Additional Payments

When salary or tax changes occur, tax adjustments require accurate timing and records.

• Using incorrect tax periods when adjusting salary or tax amounts.
• Adjustment data is not carefully checked against original records.

Impact: Long-term data errors can make audits and record checks more difficult.

7. Incorrect Annual Leave Management

Annual leave payments require accurate calculations based on employee seniority and actual working time.

• Incorrect calculation of remaining leave days based on company rules or employee seniority.
• Failure to check unused leave when employees leave the company.

Impact: Businesses may face labor disputes and unnecessary additional payments.

8. Poor Storage of Payroll Documents

Documents are important records for businesses during disputes or audits.

• Missing leave requests, employment contracts, salary adjustment decisions, or approval documents.
• Invalid documents or missing signatures from related parties.

Impact: Businesses may not have enough evidence to explain issues during disputes or audits.

9. Errors in Year-End Tax Finalization

Year-end tax finalization requires matching data between Payroll reports, internal records, and tax declarations.

• Differences between yearly Payroll data and tax declaration records.
• Year-end reports do not match monthly Payroll reports.

Impact: Errors may affect tax finalization results. Businesses may also receive higher attention from tax authorities.

Payroll Services Helps Reduce Risks

Payroll outsourcing is also known as outsourced Payroll services. It is a solution that many businesses use to simplify Payroll management.

This service helps businesses improve Payroll operations. It also reduces administrative tasks and prevents common Payroll mistakes.

NIC Global Provides Professional Payroll Services

• Ensuring compliance with Labor Laws, Social Insurance rules, and updated Personal Income Tax regulations.
• Automating Payroll processes to reduce manual errors and protect employee data.
• Providing clear reports and supporting data checks through experienced C&B specialists.

NIC Global works with many domestic and international businesses. If your company needs a solution to reduce compliance risks, lower operating costs, and improve Payroll management, NIC Global is ready to support your business.

For contact and support:

Facebook: NIC Global – Human Resource Solutions
LinkedIn: NIC Global Sourcing JSC
Website: www.nicvn.com
Email: [email protected]
Hotline: (+84) 981.23.43.76
Address:

• Hanoi Office: No. 3A Thi Sach, Hai Ba Trung Ward, Hanoi, Vietnam.
• Ho Chi Minh City Office: 158A Vo Thi Sau, Xuan Hoa Ward, Ho Chi Minh City, Vietnam.

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