Are you trying to figure out how to do payroll for your small business? Read this article to learn more about doing payroll.
If you run a small business and have a staff, you’ll need to either learn how to do payroll or hire someone to do it for you. If the latter is not an option, you’ll need to ensure that you have a good grasp of the payroll process.
It’s not a task to be taken likely–employees expect to be paid on time and accurately and any errors with payroll will reflect poorly on your business.
We’re going to tell you how to get it right. Read on to learn how to do payroll for your small business, with these five tips.
1. Get An Employee ID Number
The first step is to apply for an Employee Identification Number (EIN), which is essentially a social security number for your business. It is a unique number assigned to you that identifies your business for tax reasons.
Most small businesses will need an EIN to apply for a business bank account and file payroll taxes.
This is something you can do today, by applying for your EIN on the IRS website.
2. Determine Your Pay Schedule
Next, you’ll need to figure out how often you’ll be paying your employees. This is an important step and will affect income tax withholding.
The most common pay schedules are weekly and bi-weekly, although some employers pay monthly. Before you determine your business’s pay schedule check state and federal laws to make sure you’re in compliance.
3. Select Salary Status
When you determine pay schedule you’ll also need to choose a salary status for your employees. You have a choice between determining whether employees are exempt (paid hourly) or non-exempt (paid a salary).
This decision will be based on your employee’s position and different employees can be assigned a different salary status.
4. Ensure that Each Employee Completes a W-4
Each employee in your business must complete the Employees’ Withholding Certificate from the IRS, most commonly known as the W-4 form.
This form is critical for you as a business owner as it shows you how much federal income tax needs to be withheld from each employees’ paycheck. This depends on factors such as income and marital status.
5. Determine How Employees Will Be Paid
Will you be paying your employees with a paper check or direct deposit? This is another aspect you’ll need to figure out before you can actually pay your employees.
Regardless of the payment method you choose, ensure it’s one that you can pay on time, every single time. You’ll also need to provide employees with a paystub that breaks down all of the deductions that were taken out of each check.
You can create pay stubs online, simplifying this process for your business by taking away the guesswork.
Now You Know How to Do Payroll
Learning how to do payroll is critical to ensuring that your employees are paid on time and that there are no inaccuracies. Now that you know five key steps to follow to do it right, you can apply these within your business.
Need more business insight? Get more small business tips by checking out the rest of our site.