Struggling to figure out the right way to run payroll in your small business? Follow these four tips for success.
Handling payroll processing effectively and efficiently is critical to keeping employees happy, as well as achieving company success. As a small business owner, you should be focused on making sure it’s done correctly.
What is involved in payroll? It’s a little more complicated than simply tracking employee hours and paying people. It isn’t hard to do, though.
To help you get going on the right track, we’ve compiled a short list of things you need to do. Here are four steps for running payroll for your small business. Follow these, and soon you’ll be able to run payroll without a hitch.
1. Choose Your Payroll Processing Method
Before you get started, you need to choose how you want to process payroll each pay period. There are a few ways you can do this.
The first option is to process everything on your own. You can do this through the help of software and other tools.
Or, you can hire an accountant. This gives you reliable payroll processing, but it will be expensive.
Your third option is to outsource. Payroll outsourcing does cost money, but it frees up your time and focus to other business-related things. The tradeoff may be worth it to you.
2. Set Up Your Payroll System
You’ll need to do several things to get your payroll system up and running. You’ll also need to make some decisions.
Time off policies, how often and in what manner payments will be made, if employees are salary or hourly, and if they’re exempt or not should all be on the list.
You’ll need to get your Employer Identification Number (EIN) if you don’t already have one. And you’ll need to make sure you follow all state registration requirements for new hire reporting.
3. Payroll Taxes
Taxes are a big part of payroll, so you’ve got to understand them. You’ll need to calculate Federal, state, and local taxes for each employee. Income tax, Medicare, social security, and more need to be pulled from each paycheck.
Once you’re calculated that collected taxes, you’ll have to make sure they get paid, too. If you go the outsourcing route, they’ll calculate the taxes for you.
4. Run Payroll
For each pay period, you need to track worked hours for each employee and make sure that information is entered. Overtime needs to be taken into consideration, too. Always check for accuracy.
If you allowed employees to specify how they get paid, make sure each employee is paid the right way.
Run Payroll Without the Headache
As a small business owner, you need to run payroll. There’s just no way around it. It doesn’t have to cause you a headache, though.
Find a simple way to run payroll yourself, or hire someone else to do it for you. Keep the needs of your business and employees in mind, and you’ll find the right method for you.
Employee benefits should be on your mind as you think about payroll. If you’re considering offering life insurance, click here to learn more about if you should.