There are an estimated 31.7 million small businesses in the United States, making up 99.9% of the country’s business.
Running a business that operates on a small scale doesn’t mean that it’s easier to manage employees. Payroll is one of the things you need to decide on whether you’re new or have been in business for a while.
So, if you want to learn how to do payroll, what better time than now?
How to Do Payroll?
The first thing you have to do is gather all necessary employee information (name, SSN, banking info, etc.). To start, calculate how much each employee is owed for the current pay period.
This includes their regular wages, overtime pay, and any additions or deductions. Once you have the totals for each employee, you can begin the process of issuing payments.
There are a few different ways to issue payroll payments, such as direct deposit, paper checks, or pay cards.
Once you have determined the method of choice for paying employees, you will need to issue the payments either manually or through payroll software.
Different Types of Payroll
There are a few different types of payroll systems. How to do payroll will depend on the size and needs of your business.
The most common type of payroll is the semi-monthly payroll, where employees are paid twice a month on the 15th and last day of the month. If your business has hourly employees, you will likely use a weekly or bi-weekly payroll system. In this system, employees are paid based on the number of hours they worked in the previous week or two weeks.
Payroll can also be done on a monthly basis, but this is less common.
Tools and Software
Here are the most important tools and software you need for payroll:
Payroll and Time Tracking Software
There are several different payroll software programs available, so choose one that will work best for your business.
Employee Self-service Portal
This will allow your employees to view and manage their own information, including their pay stubs and W-2 forms. This can save you a lot of time and hassle.
You will need to file various state and federal tax forms, such as the 941 and 1099. It is always best to ask for accounting tips when it comes to taxes and forms used for them.
These reports will show you important information such as how much money you need to withhold for taxes, Social Security, and other deductions.
Two of the biggest mistakes in preparing payroll are misclassifying employees and withholding the wrong amount, this can lead to potentially big problems down the road.
Another common challenge is keeping up with the ever-changing tax laws. Tax laws are constantly changing, and it can be difficult to keep up. That’s why it is best to stay up-to-date on the latest tax laws and get more info with an accounting professional if needed.
The Future of Payroll
How to do payroll will be constantly asked as your company grows and hire more employees. Payroll can be done by yourself, or you can outsource it to a payroll company. Luckily, outsourcing payroll and a user-friendly and state-of-the-art payroll system can save you time and money, but you need to make sure you choose a reputable company.
If you want to find more articles like this one on how to do payroll, then be sure to check out the rest of our site.