If you’re an employer you must know how to manage business payroll. As this is one of the crucial aspects of running a business, you want to know how to do it properly.
It’s always wise to have a dedicated payroll department within your company. However, as a small business, this won’t always be possible. You want to know how to do payroll on your own.
This guide will show you the payroll basics so you can fulfill these obligations when a dedicated department isn’t possible.
The first step is to get all of your employees to fill out a W-4 form. This form will contain information on your employees that will get used for filing tax returns.
It will have their vital information such as their name, address, social security number, etc. When you provide them with a W2 at the beginning of the New Year, you will use the information from the W4 on this form.
You also want to make sure you provide real check stubs to your employees. These paycheck stubs serve as a record of your employee’s earnings. It will show them how much they have earned during a particular pay period. It will also show the tax withholdings from each paycheck.
These paycheck stubs are records of your expenses and are crucial for tax filing. They also help you keep a record of expenses for other payroll services. For example, you might wish to give bonus payments over the holidays. You have to first see how much you have paid to see if a bonus payment is feasible.
Set A Schedule
You have to set a schedule to meet your payroll obligations. This is one of the most serious aspects of business payroll. Failure to meet your payroll obligations can lead to legal action against your company.
First, you must decide how often you will pay your employees. The usual practice is to pay them every other Friday. You want to set a day every other week to do your payroll duties. You want to make sure that you never miss this deadline.
You want to also create a calendar that tells you when you have to meet other payroll deadlines. This includes filing taxes, providing W2 forms, etc.
You want to learn how to calculate taxes for payroll. The best way to do this is to use the IRS Withholding Calculator.
All you have to do is enter your employee’s earnings and the calculator will give you information on how much tax needs to be withheld from each paycheck. This will include federal, state, and local income tax. It will also include social security taxes and Medicare/Medicaid taxes.
Do Your Business Payroll
Now that you know how to do your business payroll, you can make sure you fulfill your obligations for your business. As your business grows, make sure that you have a dedicated payroll department to handle this important task.
If you want more great payroll tips and business tips, check out the other articles on our website!