Running a business requires a large host of details. Payroll may be the most important of these details.
Without payroll, you have no paid employees, and your business has no workers.
Messing up payroll can also be disastrous in many ways.
Here is how you can run payroll yourself without problems or issues.
- 1 How to Run Payroll Yourself
- 1.1 1. Gather the W-4s
- 1.2 2. Sign up for Employer Identification Numbers
- 1.3 3. Get Insured
- 1.4 4. Dictate a Payroll Schedule
- 1.5 5. Calculate Employee Earnings and Taxes
- 1.6 6. Pay Taxes on Time
- 1.7 7. File Tax Forms and W-2s
- 1.8 8. Find a Payroll Distribution
- 1.9 9. Maintain Payroll Records
- 1.10 10. Double Check All Numbers
- 2 From Management to the Rest
How to Run Payroll Yourself
Running payroll yourself is the cheapest way to get payroll done. It also costs the most time and has the biggest chance of error.
If you are still interested in running payroll yourself, follow these steps and you will have the process down.
1. Gather the W-4s
Each employee must complete a W-4 tax form. This dictates their filing status and their personal allowances. This is also where they mark their dependents.
This will all impact the amount of taxes removed from their payroll.
2. Sign up for Employer Identification Numbers
You will need to get an Employer Identification Number (EIN). This number identifies your business to the IRS and makes filing taxes as a business possible.
3. Get Insured
Make sure you pick up some form of business insurance. The last thing you want to do in any of this process is to be responsible for mistakes and errors.
This can also extend towards other work practices, making it a required but valuable investment.
4. Dictate a Payroll Schedule
Once the basics are set up, mark and broadcast the relevant dates for payroll. This communicates to the employees that the setup is complete and business is running.
The dates you need are employee pay dates, tax payment due dates, and tax filing deadlines.
5. Calculate Employee Earnings and Taxes
This is the big number to crunch. Gather all the information regarding employee hours, pay rates, and tax allowances, and calculation what goes to the employee’s paychecks and what goes toward taxes.
Once you have this number, you can start the distribution process of both taxes and payroll.
6. Pay Taxes on Time
As a company, you will be submitting your taxes more often. Submit all of your Federal, State, and Local taxes as needed. This is often on a month to month basis.
7. File Tax Forms and W-2s
Make sure each and every form submitted is in a proper manner. You may need professional guidance for the first year or so to ensure there is nothing left untouched.
Remember, worker W-2s need completion for submission at the end of each year.
8. Find a Payroll Distribution
How you may distribute your paystubs to your employees is an open-ended question. There are a variety of ways to do so.
A few online checkstub maker programs exist. They can help ease both the distribution and information filing process.
9. Maintain Payroll Records
As with all business details, maintain exhaustive records about all payroll and tax documents. When in doubt, be extra thorough, as this is the core documentation of where your money is being spent.
The worst cases of audit come from businesses not having thorough and organized documentation.
10. Double Check All Numbers
It is never a shame to double check your numbers. In fact, it may often save you more money, in the long run, to check over all of your calculations and form filings multiple times.
If need be, get a host of different people to check over the numbers. This keeps fresh eyes around to spot details that you may miss.
From Management to the Rest
How to run payroll is a long process and one that requires a lot of details to manage and forms to fill out. Once you get the hang of it, your business becomes a smooth running machine.
Need more help and advice regarding how to run your business? Read on for bettering your business today!