Can you believe it?! We’re almost at the halfway point of 2025!
Did you know that now is the perfect time to make sure your payroll is on solid ground. So while you’re preparing for H2, it’s a smart time to schedule a mid-year payroll audit. You’ll want to do this before small issues turn into costly compliance problems.
There are IRS deadlines to be aware of, PTO balances that should be corrected, and maybe it’s even a good time to look to make sure you have proper worker classifications.
A quick audit now saves you from scrambling later on in the year or facing penalties you didn’t see coming. So let’s get into it!
A lot can change in a month, never mind six! Maybe you have new employees, gave a few raises, or even rolled out new benefits. If your payroll and timekeeping systems aren’t staying up to date, these important changes can slip through the cracks.
Having a mid-year audit can give you the opportunity to catch discrepancies, confirm records match filings, and make sure your system reflects any changes that have been made in the last 6 months. It’s also the best time to make any corrections (in our opinion)... especially with holiday schedules around the corner!
Payroll errors don’t just affect your bottom line, they impact compliance, employee trust, and even company culture. During a mid-year audit, it’s worth looking at more than just wages and withholdings.
Are your benefit deductions accurate? Do PTO balances reflect what your policy promises in your employee handbook? Have promotions, job title changes, or department moves been properly recorded? These details may seem small, but they can create legal and financial risk if overlooked.
A mid-year review is a chance to align your records with reality. It’s much easier to fix things now than after a complaint or IRS audit.
July 31st is the deadline to submit Form 941 for Q2, this reports your quarterly federal payroll taxes. As for required state filings, please be aware it’s different for each state. You may or may not have additional mid-year or quarterly filing requirements. For example:
We recommend looking into your state specifically and if you have employees in multiple states, please note you must follow the rule per state.
Failing to file on time (or at all)—federally or at the state level—can lead to fines, corrections, or even audits!
Noncompliance isn’t just theoretical, it can come with real financial consequences. Filing Form 941 late, can lead to fines up to 5% of the unpaid tax per month. Misclassifying a worker as a contractor instead of an employee could mean back taxes, penalties, and retroactive benefits, especially if you’re audited or sued. Overtime miscalculations can result in double damages, even if the mistake was accidental.
These are the kinds of issues Megapay is built to help you avoid! Our timekeeping and payroll software gives you built-in protection against costly human errors.
Here’s a few mistakes we’ve seen and what you should look out for:
Too often, year-end becomes a scramble to fix issues that could’ve been caught much earlier. Mid-year gives you a clean window to identify problems, make adjustments, and move into the second half of the year with confidence.
Correcting a PTO balance now is a quick task. Amending a W-2 in January? Not so much!
At Megapay, we’re here to help you stay ahead of compliance and not just fix problems when they happen. But we’ll be here for that too! ☺️
If you’re unsure whether your system is where it should be, it might be a great time to get in touch!