Starting A Business? 3 Basics To Understand About Payroll
If you are starting a business, you want to make sure that you understand the basics about payroll, such as what it is, what taxes you should collect, and how payroll services can help your business with this essential task.
#1 Understanding What Payroll Is
The first thing that you need to do is understand what payroll is. Payroll is the process of paying the salaries for each individual that works for your company. This includes anyone who is an hourly worker or a salary worker.
The term payroll is also used to describe the software that handles this task. Payroll is not just about writing a paycheck; it is about all the actions that lead up to the paycheck. It is about keeping track of hours, calculating each individual pay, taking out taxes, putting money into retirement accounts, direct depositing the checks. All the actions that are required that lead up to a paycheck being issues is the payroll.
#2 Collecting Payroll Taxes
One of the most important part of payroll as an employer is understanding how to calculate and collect taxes. As the employer, you are responsible for collecting and paying your employer's withholding of Social Security and Medicare taxes. You also have to withhold federal income taxes for your employees. In states that have income tax, you also have to withhold and collect income taxes as well.
You don't have to just collect these taxes, you have to report and keep track of the amount that you withheld for each paycheck and submit this reporting as well as the payment to the government.
#3 Using Payroll Services
Payroll is not something you want to get wrong from multiple standpoints. You don't want to underpay the federal or state government. Your employees depend upon you to pay them on time so they can deal with their own financial obligations.
You need to make sure that all employees are properly classified. You need to use employee supplied information to make sure that you are withholding the right amount of taxes. You need to make sure that you meet your responsibilities to the IRS and the state your business is located in. You need to make sure that you deal correctly with the banks for direct deposits.
All of these tasks can be taken care of by a payroll service or accountant. You do not have to do all of these complex financial tasks on your own. You can outsource these tasks to ensure that they are done right and are completed on time every pay period for your business.
If you are starting a business, payroll is going to become a regular part of your business accounting routine that you need to make sure is handled properly. Properly handling payroll will benefit your bottom line and will help ensure that you don't get in trouble with the IRS and will ensure that you keep your employees happy with on-time paychecks that are correctly calculated.