If you’re struggling with payroll management, look no further.
Managing payroll is a problem that many business owners have because it requires you to do various tasks to get it done properly. Although this can seem stressful at first, you can use a variety of payroll tips to breeze through the process.
Payroll is an important part of the business because it revolves around paying your employees what they’re owed. Because of this, you’ll need to gather tax information and properly monitor how long employees are working. Coming up with a solid payment schedule is also necessary if you’d like to be consistent.
Keep on reading to learn more about how to manage payroll in small businesses!
Get an EIN from the IRS
One of the first things you should do as a business is to obtain an EIN (Employer Identification Number). This number is essentially a Social Security Number, but it’s used for businesses. It makes things like filing taxes and paying employees easier because it gives the government a way to track everything.
Getting an EIN is as simple as applying for one from the IRS’s website. When you fill out tax-related forms and pay your employees, you’ll use this number on those documents. For example, the W2 is a tax form that you’ll need to give to employees at the end of the year and your EIN will be on that.
Have Employees Provide Tax Information
When it comes to managing payroll, many business owners forget that they need to obtain tax information from employees before paying them. Getting tax info is crucial because you need to know if they’re legally eligible to work. You’ll also need to know their marital status and if they require tax allowances.
With the W-4 form, employees can fill out all of their information. If they want to set aside money from each check to put towards their taxes, they can state how much they want.
Should an employee change their marital status, they’ll need to file a new W-4 form. This is because some of those that are married will get tax breaks.
When it comes to one’s legal eligibility, they’ll need to file I-9 forms. These forms will require an employee to fill out information relating to their citizenship in the United States. All employees will need to do this and you’ll need to report them to your local new hire bureau.
If you’re looking to pay your employees via direct deposit, you should acquire their bank information so you can send the money. Have them provide you their routing number and the name of their bank.
Come Up With a Payment Schedule
Creating an effective payment schedule is something that many business owners struggle with. However, payroll management revolves around keeping a schedule, so you’ll need to think about how often you’ll pay your employees.
Most businesses pay their employees every other week (bi-weekly). This is especially common in jobs where employees get paid based on hourly wages. If your employees will be paid salaries, you can opt for monthly payments.
Keep in mind that employees with salaries are more likely to approve of monthly payments, but those that are paid hourly will prefer bi-weekly payments. This is because it’s difficult for those with hourly wages to know how much income they’ll receive.
Monitor Employee Hours
After you’ve got all the important information needed to start managing your employee payroll, you’ll need to start monitoring employee hours after you’ve hired them. This isn’t something you’ll need to worry about if all of your employees will earn hourly wages.
Monitoring employee hours will prevent you from paying an employee too much or too little. Should you underpay an employee, you could get sued by them because it’s illegal to underpay someone.
To effectively monitor their hours, you can use the likes of a clock-in system. When an employee comes into work, they can sign in to a computer to notify the system that they’ve started working. You can also opt for an old fashion system by having them record their times on paper.
Whichever system you decide to use, have a manager monitor employee hours with their own paper. Keeping a physical copy of the hours will prevent you from not knowing how much to pay if there’s a failure in the computer system.
Work With a Payroll Service
Although using these payroll tips will let you effectively manage one, you can avoid doing everything by working with payroll services. Companies like this payroll service provide other businesses with a convenient way to manage their payroll.
Instead of having to push out checks and take care of tax forms, the payroll service can do that. This will let you save money that you’d spend on an accountant and prevent stress from potentially messing something up.
After you’ve gotten the core information you need for your business, such as the EIN and employee tax info, you can reach out to a payroll service as soon as possible.
Now You Know How to Manage Payroll
Managing payroll shouldn’t be something that you have to stress about. After reading this article, you have all the info you need to start paying employees properly. Keep in mind that you can always work with a payroll service if you’d like to further simplify the process.
You’ll need to start by getting an EIN as soon as you start your business. From there, everything else will fall into place as you go through the steps to manage payroll.
Check out our articles to receive more business advice!
