5 Payroll Tips For Entrepreneurs
When you're in business for yourself, one of the biggest time-consumers you have to deal with is your payroll. No matter whether your business is big or small, it helps to have a plan in place to make sure that you don't make any big mistakes and that your employees (and taxes) get paid on time.
Here are some of the best tips to use in order to keep your payroll running smoothly.
1.) Set up a tracking system for the taxes.
Withholding the wrong amount of taxes can be damaging to the health of your business, especially if the IRS gets involved. You need to make certain that the software you're using keeps track of hours, pay periods, vacation time, benefits, raises, and tax deposits on an ongoing basis.
2.) Don't fall behind on your tax deposits.
Unfortunately, taxes are a big part of payroll, and tracking them is only part of the job. You also have to make deposits on any federal and state taxes due on a regular basis throughout the year. Local tax deposits may also be an issue, depending on where you live. If you miss a deposit that's due, you can end up facing some hefty late penalties and accrued interest.
3.) Classify your employees correctly.
The misclassification of employees as independent contractors is a big problem in many industries. Paying an employee as an independent contractor in order to reduce your tax burden (and the amount of work that you have to do on the payroll) is a big mistake that could open you up to serious fines from the IRS.
4.) Keep all your documents together.
You'll make the payroll process simpler on yourself if all your records and documents are kept together. If you've been working partially on location and partially out of a home office, it's easy for information to get scattered and records to be misplaced. Consolidate everything into one location and keep it there. That will also help significantly if you ever face an audit.
5.) Consider switching to payroll services.
If you're starting to feel like the payroll demands are taking too much time away from your actual business, it might be wise to invest in payroll services. The software programs that you can use on your own are handy, but they still require a lot of time-consuming effort on your part. Payroll services excel at making sure that employees and taxes are both paid on time, and they will make sure that your records are always up to date and organized -- without any real work on your part!
For more information, contact a company like The Callen Accounting Group, PLLC.