Home Business Common Payroll Errors and How to Avoid Them in Canada

Common Payroll Errors and How to Avoid Them in Canada

by Louise W. Rice

An effective payroll management process involves ensuring employees receive accurate and timely payments and the company is in compliance with labor laws. But without enough resources and the right tools, the employee payroll can be full of errors, which can cost your company valuable time and money.

Your company has various options available for handling Canada payroll jobs at hand. It can either outsource or complete the tasks in-house. You need to keep in mind that the payroll management process is prone to errors, especially when done in-house.

In-house payroll solutions feature twice as many errors compared to outsourced service providers. That means in-house payroll solutions easily miss one or two steps when going through the process.

This article explores the most common payroll errors, how they can affect your business, and how to avoid them. Below is a list of these errors and more information about them.

Misclassifying Employees

Payment differs based on the classification of employees in the company. You’ll find different types of employees in a single company, ranging from part-time to full-time workers. Also, some workers can be informal while others are contractual. Some only offer expertise on projects, while others only work for pre-decided periods.

While some receive a lump sum, others get hourly rates. When dealing with all these payrolls, it’s easier to make mistakes. To avoid errors, ensure effective and up-to-date payment policies are adhered to. Before releasing any payment, the HR team should check the payment policy of each classification.

Incomplete and Disorganized Records

An inefficient and unorganized payroll procedure can be a disaster recipe. Relying heavily on manual data entry, paper processes, or excel spreadsheets results in errors that can take days, weeks, or even months to correct. Also, incomplete and disorganized records can result in payment failures or follow-ups on urgent tasks.

Also, having a manual payroll management system means the business depends on one or a few experts to manage all actions. Additionally, it’s easier to fill the payroll manager position with an automated and organized system. There are two solutions to this error; outsource payroll functions to a third party and purchase a computerized system.


Miscalculations are a common error, especially when using in-house manual solutions. Incorrect paychecks can be frustrating for employees, mostly when they result in payment failures. Also, miscalculations waste a lot of time since you’ll have to dedicate several hours, days, or even weeks to investigate and find solutions.

Within the period it takes to fix those mistakes, affected workers’ frustration grows since they aren’t able to complete their bills in most cases. Payment miscalculations can happen to both hourly and salaried workers. Just like incomplete and disorganized record mistakes, miscalculations can only be solved by outsourcing payroll services.

Incorrect Tax Declarations

Deductions and payments are a vital part of payroll. When errors occur, a company may suffer costly consequences. Depending on the country, various tax declarations need to be paid and submitted to ensure your business complies with labor law.

Employers must complete and submit some forms, and those who provide incorrect information have severe legislative issues. You should train your staff to check all forms before submitting them to ensure everything is correct.

Final Thoughts

Whether your business is local or international, finding a perfect payroll solution can save you valuable resources and time by completing some tasks on your behalf.

Outsourcing your payroll functions is a proven and powerful way to avoid these errors. Look for the best payroll service provider and take your business payroll functions to a whole new level.

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