When you need your business to do well, it's important to get a handle on your internal matters. This means learning the payroll basics and handling these issues accordingly. There are some basics you need to know about payroll to be sure everyone gets paid on time and that you are properly balancing your books. To this end, follow these tips to get the best work possible.
1. Start By Getting Your Employees To Properly Fill Out Their Human Resources Documents
Everything with payroll starts by making sure your employees properly fill out their tax forms upon hire. This is when having the help of a quality Human Resources professional can be so incredibly invaluable. When you handle your human resources (HR) matters, you are giving your business a competitive edge.
You will need to have your employees fill out W-4 forms that outline their personal information, such as the social security number. In doing this, you will be able to keep track of their earnings so that both parties have a clear understanding of how much they are being taxed and how much tax will be paid by the end of the year.
Handling these issues on the front end will help to avoid problems down the line and will make sure that you can keep accurate records and avoid tax issues. Likewise, you must make sure that you're getting your employees their W-2 forms promptly so that they can address their taxes. This is the document that your employees will take to their tax preparation professional to calculate income and pay taxes accordingly.
2. Collect Taxes Out Of Each Of Their Checks
It is also important that you stay organized and consistent with taking taxes out of your employees' checks. You will need to take out taxes at all levels, from local, state to Federal. You will also need to account for Social Security funds. The amount that you collect will vary from person to person, which is why you must be diligent about handling payroll in an organized and accurate manner. Surely understanding the paystubs deduction and paying salary on hourly vs monthly basis will help you tremendously as well. Ultimately, keeping abreast of the ongoing tax laws and being in the loop of taxes regarding chartitable donations are always recommended.
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3. Choose A Uniform Day Of The Week And Process For Your Employees To Get Paid
For your payroll process to be easy and straightforward, make it as easy on yourself as possible. For one, pick one day of the week in which everyone will get paid and stick to the schedule. When you manage the schedule, everyone will be well aware of what to expect and breaking it down and analyzing it will be far easier.
The best method to use in this day and age is direct deposit. Not only does direct deposit allow for speed and accuracy, but it is also green-friendly because you do not need to print out breakdowns of the payment. Instead, you can set up a database or send digital records for your employees to browse as they see fit.
4. Make Sure That You Are Staying In Line With All Laws
Tax laws change continuously, so when handling payroll, these are issues that you need to keep in mind. For example, state and federal minimum wage laws change, so you will need to adjust your payroll accordingly to keep up with these changes. You must also be aware of other nuanced laws, such as whether or not you can legally require your employees to register for direct deposit or not.
Different states address this in different manners, so always stay within the confines of the law when handling your employees' payroll matters.
5. Figure Out Employee Types, Timekeeping, And Other Matters
Do you have exempt or non-exempt employees -- or a mixture of both? Perhaps you are paying independent contractors who fill out 1099 tax forms. Regardless, these are matters that you need to be aware of when handling payroll. Additionally, you must keep track of time in the form of employee log-ins or timesheets.
These are issues that need to be archived and compiled for your records. You may also want to look into things like mileage reimbursement for employees that drive their vehicles on the job. This means looking into the state mileage reimbursement rate for the tax year so that you can pay your employees out accordingly.
6. Invest In A Quality Payroll Software Or System
The best thing you can do is invest in a payroll software or system that works for you. By creating your paystubs and compiling your records in a high-quality software platform, you can easily handle payroll -- even if accounting isn't your background. Likewise, you can also reach out to the help of a finance professional that can look out for you.
Getting help from a bookkeeper might cost you between approximately $20 per hour and $50 per hour. No matter which way that you decide to go about it, be sure that you maintain your records indefinitely, and keep them as organized as possible.
Make Use Of These Payroll Basics
When you have a good feel for payroll basics, you are less likely to make mistakes and can handle your business' finances on your terms. You might also enjoy reading this article on simplifying office processes. This is a matter of business that you need to get a handle on. We'd be glad to help you out. Check out our online Form W2 generator and manage your payrolls easily. Perhaps you would also enjoy reading this piece on employees accessing their pay records and the new revenue recognition standard.