How To Make Payroll Easier
Just the thought of paying payroll taxes is enough to vex a small business owner. In addition to being a financial strain, filing the taxes can be complicated. There are a couple different ways to make the process simpler for you. You can either do it yourself, contract a payroll preparation service, or a mixture of both.
The do-it-yourself method of simplifying the payroll process is just a matter of knowing your facts. Research the laws, teach yourself the techniques, and realize that the time you spend now working on learning this will save you time later. There is a lot more to doing payroll than just writing a check.
If you decide to contract out with a payroll preparation service, you will definitely save yourself some time. This may not be the best option for your business, however, so you will need to weigh the pros and cons of outsourcing. Obviously, you will want to make the informed choice that will profit your company the most.
The last way to manage your payroll easier would be to do a mixture of outsourcing and in-house processing. Some of the more complicated processes that eat up the majority of your time, like paying payroll taxes or making records, can be managed by the experts. Simply handle the less complex portions right at your business and let the payroll preparation service take care of the rest.
No matter which path you choose to take, you’ll have to be sure you have complete records for your employees. Records you should keep will include the basics like their name and address, and also completed forms such as their I-9 and W-4 forms. It’s a good idea to keep a checklist in the front of their folder to make sure you have compiled all the necessary forms.
Most likely, your employees won’t know how to fill out all the forms. This fact makes it essential to keep a cheat sheet with the form that will instruct the employee how to answer the questions. You will also need to double check the answers they give to make sure the information was entered correctly. It isn’t your job to make sure your employee has the right withholdings down but you are responsible for making sure they have the information they need to fill out the form.
Also, in order to be certain that your business is keeping strict IRS rules, be sure to classify your employees correctly. If you put your employee down as an independent contractor, you are saying they a person who decides for themselves when they want to work and how they will go about doing their job. This is not the same as an employee, and you don’t want to illegally classify your employees just to avoid paying the employee’s payroll taxes.
There are high fines that can result from incorrectly categorizing your employees. Before you pay your employees, figure out whether they are an employee that you must take care of payroll taxes for, or it they are a private contractor. A private contractor will take care of paying their own payroll taxes. Make a list of questions that will help you pinpoint which one of these categories your worker should be in.
It’s generally a good rule of thumb to know what you are getting into before you start a new business. That way, you can steer clear of the fines that come from breaking laws, whether you mean to or not. Regardless of whether you use a payroll preparation service or do your own payroll, make sure that you have all the necessary information in place for your employees and that you record their information properly. If you have all your information together you can automatically make your payroll easier.