Even the most organized payroll process can experience occasional hiccups. Whether it’s an underpayment, overpayment, or a tax withholding mistake, payroll errors can affect your employees’ trust and your business’s compliance if not handled quickly and correctly.
Here’s what to do when you discover a payroll error and how partnering with Group Management Services (GMS) can help prevent these issues from happening in the first place.
Act quickly and communicate openly
Timing is everything. As soon as you discover an error, confirm who is affected and to what extent. Notify the impacted employees promptly, explaining what happened and the steps you’re taking to rectify the issue. Transparent communication helps maintain employee confidence and shows that you take their pay seriously.
At GMS, our Payroll Specialists and built-in audit tools in GMS Connect help clients catch discrepancies early, so most issues are resolved before payroll is finalized.
Find out why it happened
After you identify the mistake, dig into the root cause. Was it a simple data entry issue? A misclassified employee? An outdated pay rate? Understanding what went wrong helps you put safeguards in place to stop it from happening again. GMS guides clients through complex payroll compliance areas, such as employee classification and benefits deductions, so they can focus on running their business without worrying about hidden payroll pitfalls.
Correct the error carefully
Once you know the cause, fix the numbers promptly and accurately. For underpayments, issue an off-cycle payment as soon as possible. For overpayments, work with the employee to arrange repayment that follows federal and state wage laws. If the mistake involves taxes, adjust your payroll records and file any necessary amendments.
GMS handles these corrections on behalf of our clients, ensuring that payments and tax filings remain compliant and accurate.
Document everything
Keep a clear paper trail of what happened, when the mistake was discovered, how it was fixed, and any communication with employees. Documentation protects your business during audits and helps resolve any future questions that may arise. With GMS, all payroll changes, adjustments, and reports are securely stored, ensuring you always have the necessary records.
Strengthen your payroll process moving forward
Transform mistakes into learning opportunities by reviewing payroll workflows and incorporating checks, such as approval processes or automated alerts. Investing in modern payroll software or working with a payroll partner can significantly reduce human error.
At GMS, we combine advanced payroll technology with experienced payroll professionals to give businesses confidence in every payroll run. We’re not just processing payroll; we’re building proactive strategies that keep your business compliant, and your employees paid accurately and on time.
Payroll errors don’t have to define your business
By acting quickly, remaining transparent, and learning from past mistakes, you can rectify errors and safeguard your team’s trust. But the best strategy is prevention. Partnering with GMS means more than handing off payroll tasks. It means gaining a team dedicated to accuracy, compliance, and continuous improvement, so your business can focus on growth instead of payroll headaches.
Our online payroll software, GMS Connect, gives you the ability to complete payroll in minutes as well as manage and access payroll information anywhere there’s an internet connection. Additionally, our payroll software integrates with other platforms, enabling us to calculate and apply deductions for health insurance and other employee benefits seamlessly. Ready to see how GMS can make payroll simpler and more reliable? Contact us today to learn more.