Are you a small business owner who is overwhelmed by payroll tasks? If so, you are not alone. Payroll can be complicated and time-consuming, especially for business owners who are already busy enough. There are still those that like a challenge and prefer to process payroll themselves, but fortunately, there are solutions available for those that would like a process that is a little bit easier. We have highlighted some of the options available to small business owners when it comes to payroll and provided tips for making the process as smooth and stress-free as possible. So, if you’re ready to learn more about payroll for small businesses, keep reading!
Process Payroll Yourself
For the tax savvy business owner, the DIY approach to paying your employees may be the right method for you. But given all the payroll mistakes you can make and fines that will result, don’t dive in unless you are completely comfortable with everything- from what taxes should look like as well as how much money is owed per employee.
Follow these steps:
1. All employees complete a W-4 form
When you hire a new employee, it’s important to file Form W-4 with their wages. This form documents the filing status and personal allowances of your workers so that taxes can be assessed accordingly.
2. Employer Identification Numbers
The IRS requires that every business have an Employer Identification Number (EIN), which is used by the agency to identify any person or company paying employees.
3. Payroll Schedule
Once you have your EIN you need to add three important dates to your calendar: employee pay dates, tax payment due dates, and tax filing deadlines.
4. Calculate and Withhold Income Taxes
Use the IRS Withholding Calculator and your state’s resource to determine which federal and state taxes to withhold from your employees’ pay. You must also keep track of both the employee and employer portion of taxes as you go.
5. Pay Payroll Taxes
When it’s time to pay taxes, you need to submit your federal, state, and local tax deposits according to your schedule.
6. File Tax Forms & Employee W-2s
Send in your employer’s federal tax return quarterly and state or local returns as applicable. Prepare your annual filings and W-2s at year-end.
Takeaway : The DIY approach to doing your company’s payroll is less expensive, but you open your business up to risky mistakes and costly fines.
Use a Payroll Service
Payroll services are the answer for any small business owner who has found themselves bogged down by payroll paperwork. These professionals take care of everything from paying employees to processing taxes – allowing you to get back to focusing on things that make your business money.
Like the DIY approach, all employees must complete a Form W-4 and your business must have an Employer Identification Number (EIN).
1. Choose a Payroll Provider
Payroll providers automatically process payroll calculations, payroll tax statements, year-end taxes and more for your company. There are multiple factors to consider when choosing a payroll service, such as features, ease of use, cost and support.
2. Add Your Employees
Add your employee’s information – name, address, Social Security number and tax withholding information.
3. Track & Import Hours Worked
Employers are required by The U.S. Department of Labor to keep track of wage records for up to two years.
4. Process Payroll
Run payroll with the click of a button
5. Track Tax Payments and Filings
The IRS requires tax forms to be kept for three years. All required information is kept and available through your payroll provider.
Takeaway: Although a payroll service is more expensive than handling payroll on your own, payroll services perform a variety of payroll-related tasks for you, greatly reducing risk and the time it takes to run your payroll.
Hire an Accountant
For those that are not interested in taking on the burden of doing their own taxes or using a payroll service, hiring an accountant may be the right fit for you and your business.
1. Choose an Accountant
This is not a decision to be taken lightly. Your accountant will become deeply involved in the operation of your business. Do your research and find someone you trust.
2. They do the rest!
Takeaway: Hiring an accountant is the most expensive option, but it eliminates risk and ensures you are compliant with federal, state and local payroll, wage and tax laws.
If you’re a small business owner, it’s important to understand that there are different methods available to process your payroll. Finding the right fit for your business is imperative. Take the time to research your options, so you can ensure that your business will have a smooth and easy experience when it comes to paying its employees.
No matter your size, we can custom tailor a payroll solution for you. Contact us TODAY for an initial payroll services strategy session.