As a small business that is growing, you need to get ready to handle payroll and all of the components that come with it. You may not be able to handle the expense of hiring a payroll service to do that for you, but there are some simple steps you can use to help get payroll started and to ensure your employees are paid on time. Some of the simple steps to follow to run payroll for your small business include:
Get Your EIN
The EIN, or Employer Identification Number, is similar to a social security number for your business and can help at tax time. If you started your business as an individual, you may not have this number yet. As you add on employees though, you need to sign up for one of these to help when filing taxes, both for you and for your employees. You can register for one through the IRS to make things easier.
Gather Employee Tax Information
Before you can do the payroll, you need to collect a bit of information about your employees. They will need to fill out a W4 form when you hire them. This will ensure that you withhold the right amount of taxes based on the personal information for the individual. Each employee will be different based on if they are married, if they have kids, and if they want extra taxes withheld during the year.
Set Up the Pay Schedule
You need to decide how often you will pay your employees. You have some freedom with this, as long as you are on the same page with your employees during this and do not change it all the time. Some will do this bi-weekly, weekly, or once a month. You must consider what makes the most sense for your business and what the laws are in your state before you get started.
Run the Numbers
Now it is time for you to run the numbers to figure out how much each employee worked, how much they earned, any overtime and holiday pay, and then their state and federal taxes. You must figure out how much they earned first. Look at all of the hours they worked and then start with that number. You can then do a percentage of their pay to come up with their federal and state taxes each month. Deduct these from the gross pay and withhold it for taxes too.
With all the information ready to go, you will be able to distribute the paychecks. Sometimes this is done with a paper check and other times you can do it through direct deposit, depending on what works for your employees. Keep some records for yourself to make handling taxes a little bit easier.
Create Paystubs for Employees
As you are working on the payroll for your small business, you should consider creating some paystubs to make things easier. These can help you keep track of the payroll records better and can be a useful tool for your employees to keep track of things as well. There are several online options that help you create the best paystubs for all your needs, including FormPros, so you do not need to stress out about this either.
Keeping good records and finding the right system to help you handle payroll for your small business is a smart decision. This helps improve employee satisfaction and ensures that you do not have a mess to handle at tax time. Follow these simple steps to see how easy running payroll can be for your small business.