Are you in charge of processing your small companies payroll? The process might seem overwhelming but the good news is, it doesn’t have to be. With some organization and understanding, you can easily add a new employee or make additions to your staff.
Keep reading to learn some clever hacks for your companies payroll processing.
1. Get to Know Your Employees
When you are in charge of processing the payroll for your small company, you have to be familiar with how to withhold several types of taxes. These taxes include Medicare, Social Security, federal income, and state taxes where applicable.
This process can be easier for you if you get to know what their filing status is, their Social Security number, any withholding allowances, and their address. This can be easily obtained by having them fill out an IRS Form W-4.
You will also need to make sure you are classifying them properly as either employees or independent contractors as this will make an effect on their tax filing status.
2. Stay Organized
When you are figuring out your employees withholding you will need to keep track of their pay. You will need to develop a system to keep a record of the hours that the person has worked and retain these records for at least four years in case there is an audit by the IRS.
This can easily be achieved by using pay stub templates which will also allow you and your employee to keep track of other withholdings such as medical benefits or retirement savings.
Another great way to keep organized is by opening a separate bank account from your companies operating funds to process payroll. This will establish a clear division between the two and keep you from coming up short on the payroll if the company needed more funds that month.
3. Make Payments on Time
Most states will have a statute on how often you should be paying your employees. You can pay them as frequently as you like as long as you are meeting the required amount as dictated by the government.
The common pay schedules are weekly, biweekly, semi-monthly, and monthly with most companies choosing biweekly or semi-monthly to help them manage their cash flow. It is helpful for you and your employee to know what the payment schedule will be so they are able to manage their expectations.
Keep in mind that there are penalties for not paying your workers on time and you will accrue steep fees from the state and the federal government. Additionally, you may even face imprisonment.
Learn More About Payroll Processing Today!
These are some of the best ways for payroll processing that will ensure it is a painless process every month. Start by having your new employees fill out an IRS Form W-4 for help determining their tax withholding.
Then create a paystub that will help you and them keep track of their hours worked as well as any tax withholding and medical benefits. Lastly, always create a payment schedule to set expectations for you and your employees. If you would like more business tips or information be sure to visit our website daily!
