From small businesses to large corporations, payroll always operates in the same way.
Everyone has the same obligations, whether they’re paying one employee or one-thousand. If you are paying people in your organization, you need to have your payroll highly organized.
Getting it right is tough, with the many regulations and options available. In this article, we’ll go through 6 steps to set up payroll in your company. Keep reading to learn more.
Register Your Business
You will first need to register for a Federal Employer Identification Number. This number will allow you to pay employee income tax and pay into government programs. This can be done online.
Once registered here, you must register in any state where you will do business. Finally, register for any tax agencies that you may need to pay at local or city levels.
Collect Employee Information
Once you know how to create pay stubs, you can collect employees’ pay information using a spreadsheet or software.
To process their payment you will need to collect a social security number, a W-4 with name, and address information. All name and address information should match the details on the other forms the employee has provided.
Decide When to Pay
You must now decide how often to pay your employees. This decision will rest solely on the type of business you have.
If you have a constant income stream, you may wish to pay weekly or bi-weekly. This is popular for companies that have a high level of staff working varied hours. It can be expensive to operate payroll in this way.
The next option is semi-monthly, so employees are paid at the middle and end of the month. It is easier to operate but can make overtime calculations tough.
Finally, monthly pay is great for people who are on a fixed salary. It is the least expensive in terms of operating costs.
Pay From a Business Bank Account
You should do all business banking through a dedicated business account.
This will help protect you from any accusations of fraud or legalities. It will also help you manage your ongoing and outgoing assets.
Set up Payroll Taxes
When paying employees, you are legally required to comply with many regulations. Failing to do so can result in government action against your company.
These include the payment of Federal Income Tax and Federal Unemployment Tax. You will also have to pay State Tax and State Unemployment Tax, along with any medical insurance and social security.
Consider Outsourcing or Hiring More Staff
If you are struggling with payroll or do not have the time, then you have two options. These are outsourcing your payroll obligations or hiring more staff.
Both of these will cost money. Outsourcing to another company will cost less than hiring a full-time member of staff. However, with a full-time member of staff, they may be able to do other jobs within your organization.
Stay up to Date
Now that you know how to set up payroll, remember to update information on a regular basis. Ask employees for any changes in address or contact details they may make.
This will protect you in case of any discrepancies with payor tax.
If you are still trying to stay up to date with technology or business, visit our blog regularly. We always have new articles that will assist you in keeping up to date and making decisions in the modern world.