How to do payroll for small business?

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How to do payroll for small business?

As a small business owner, one of the administrative challenges you may face is making accurate business payroll calculations. However, you are legally obligated to have an efficient business payroll system in order to make timely payments to your employees. Failure to do this might lead to serious legal problems for your business.

Bearing this in mind, here are essential steps and instructions on how to do your business payroll correctly.

1.    Apply for an Employer Identification Number (EIN)

An EIN is a unique number used in identifying your business by the IRS. You must, therefore, apply for this number. An excellent and convenient method would be by applying directly to the IRS through an online application. However, you can also make applications by mail or fax.

Also, some states and jurisdictions may require that you have a separate number for tax purposes. Therefore, check to see if this is a requirement in your locality by using your state’s business website.

2.    Do you have independent contractors or freelancers?

When you have any of this personnel, you may not be required to withhold tax or benefits for these individuals. They are responsible for making their tax payments as they do not fall under your company’s employee network.

3.    Obtain the Required Employee Forms

When you have your own documents in place, you are required to gather some important documents for your employees. These documents include the Federal Form W-4, State W-4, and I-9 form and they must be accurately filled by your employees. Depending on your state, you might require additional documents.

4.    Select Your Pay Period

Typically, when you have fewer pay periods, you might find it easy processing your business payroll. However, some states have set schedules for payment which may be as small as weekly payments. Whatever your preferences, you should contact your State Department of Labor to check that your pay period conforms to state regulations.

5.    Create Business Payroll-Related Processes

Depending on your methods of payment, you might need to keep track of your employees’ hours. This is especially important to set up policies regarding overtime pay, paid time off and other benefits. Also, you should set up an appropriate system to ensure that benefits, taxes and other deductions are made appropriately.

6.    Select a Payroll Platform

The business payroll process may be quite a daunting task, so you should ensure that you pick the right system to ensure that your employees are paid timely. If you decide to do your payroll in-house, you should consider the hours and whether you or your bookkeeping might be comfortable with the tasks.

Many small businesses prefer outsourcing their business payroll processing to third-party entities. This is because these professionals possess the skill and experience required to create payroll accurately and timely.

7.    Provide Net Pay

Once you have entered the right employee information into your business payroll system as well as made all necessary deductions, it is time to pay your employees. The paycheck paid to each employee is called net pay. There are many ways to pay your employees. You may pay by direct deposit or business check. However, this is subject to your preferences and your employee’s choices.

8.    Retain Required Records

To ensure that your business is payroll complaint, make sure to retain all payroll documents such as time cards, pay stubs and any other information relating to payments. Regardless of the tenure of service, it is crucial you retain all records for active employees, up to the last four years.

9.    Calculate and Pay Federal and State Payroll Taxes

Lastly, as a small business owner, you are obligated to sum up all payroll tax payments, prepare related documents, and submit them to the IRS timely. These reports may be required annually or quarterly. Therefore, check with the IRS and your local tax office to ensure that they properly handle all your tax reports and returns.

It is vital that your business payroll system is accurate and processed in a timely fashion. Therefore, you are obligated to handle your business payroll judiciously.  Outsourcing your payroll processing is an excellent decision that would give you confidence regarding efficiency and time management.  When you need the right professionals for this task, we are here for you. Call us (212) 320-8191 or send a mail to info@urgenttaxservices.com

Urgent Tax Services

6009 16th Ave,

Brooklyn, NY 11204

Ph. (212) 320-8191

Fax (646) 626-6447

sol@urgenttaxsrrvices.com

www.urgenttaxservices.com

 

 

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