Running Payroll for Your Small Business
For any small business owner responsible for their own bookkeeping, running payroll can be a time-consuming task that only increases as you start to grow your team.
It can be challenging to keep up with everything that payroll entails (state and federal taxes, social security, Medicare, taxable wages, any deductions, etc.) when you’ve already got so many other things on your plate. Whether you find yourself wanting to focus your time on other things, or you’re considering scaling your business and want to put all of your energy into that growth, outsourcing your payroll services can be a wise and sound investment.
There are a number of steps required to run payroll, so if you’re just getting started, we’ve outlined those key steps you will want to keep in mind.
Identify Your Company
Before you do anything else, you’ll need to obtain an Employer Identification Number or (EIN). It’s not required, but most business owners don’t want to give their social security number out to their employees, so you can use your EIN instead. This number is necessary for reporting taxes to the IRS, and information about your employees to state agencies. Some local and state governments also require this ID number to process taxes. You may need to obtain registrations with your state department of revenue and department of labor, depending on how many employees you have or how much you pay in wages.
Correctly Classify Your Employees
There are several different ways that you can employ workers in your small business so it’s important that you know the distinction between an independent contractor, a freelancer, and an employee. Their employment status will directly affect if and how income, Social Security, Medicare, and unemployment taxes are withheld. You’ll also need to classify your employees as exempt or non-exempt.
Get Your Forms In Line
A W-4 is required documentation for your employees to complete and return to you so that you can withhold the correct federal income tax from their paycheck. Many states also require a state W-4 form to properly withhold state taxes. A Form I-9 is required for all U.S. employers to verify the employment eligibility and identity of each employee hired to work in the U.S. (including U.S. citizens). Employers must have and keep a record of this for each of their employees.
Determine Your Pay Period
In some cases, your pay period is determined by state law. The IRS requires that you withhold income tax for that period of time, even if your employee doesn’t work full time. The only case in which this would not apply is if your employee doesn’t make enough money during that time period to withhold tax, which can happen for tipped positions.
Running Payroll & Keeping Records
Once you get to this step, that means you’ve gotten all your forms completed and information filed in the appropriate places. Your next step is to set-up direct deposit and choose either a software provider or an outsource company to help run your payroll for you. Both will help you to track and withhold accurate tax amounts from your employees, plus save you a lot of time in the payroll process.
Benefits of Outsourcing Your Payroll
- It’s Cost Effective
When you outsource your payroll, you’re free to use your staff as they’re most effective and efficient. If you let us handle payroll and the associated legal details, you can reduce overhead by removing the need to hire specialized employees to manage this process.
- It’s A Time Saver
Our payroll service eliminates the burden of customizing, updating, and maintaining your own payroll system — no more data entry, no more researching updates and new laws, and no more worries.
- Worry-Free Payroll Tax Filing
Eliminate the risks of calculating and filing your own payroll taxes by having professionals do it for you. Federal, state, and local payroll tax laws are frequently changing and becoming more complex. How much time do you really want to spend learning all the rules and keeping your information up to date?
- Allows You To Focus On Core Competencies
Utilizing our team of payroll and tax experts will allow you to focus on the core competencies of your business. We are accounting professionals which means you’ll have the experts working with you and for you so you’re free to do what you do best.
- Comprehensive Reports
You get a wide variety of user-friendly and accurate payroll reports. For a nominal fee, we will include union reports, certified payroll, workers’ compensation reports, and much more.