Why is payroll accuracy so important, especially from an employee’s point of view?

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Lorraine Caplan | College Teacher | (Level 1) Educator Emeritus

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Payroll accuracy is important for many reasons, from the perspective of the employer, the employee, and the government.  When there are inaccuracies in payroll, the record-keeping of the company is improper, not allowing it to see what the cost of an employee is, not allowing it to even properly calculate profits or losses.  You cannot know know this without knowing the cost of your employees.  From the employee's perspective, the work has been provided, so the proper amount is due and owing.  No one wants to work for less than he or she has earned, certainly, and if more is paid, that is just as bad because it will have to be returned.  Payroll inaccuracy can also create problems if some amount of pay is deducted to pay health insurance premiums.  Additionally, payroll records are often the means by which paid time off is calculated, and the employee is entitled to know how much time is available. From the perspective of the government, the federal, state, and local governments have a great stake in payroll accuracy for the purposes of calculation taxes, Medicare, Social Security, workers' compensation, and unemployment compensation.  Inaccuracy in payroll records can create problems in all of these areas for the employer, the employee, and the government. 

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