Payroll management is one of the core responsibilities of any employer. When you start hiring people, you need to manage your payroll so that everyone is paid on time and the correct taxes are paid too. If you want things to be as easy as possible, you can outsource payroll or hire someone in-house to do it for you. But if your aim is to save money or your small business can’t justify hiring someone to do payroll, you can do it yourself. The DIY route might take some effort but it can save you a lot of time and money.
Understand Laws and Compliance
One of the hazards of doing your own payroll is that you have to navigate various laws and regulations. Someone who is already an expert in payroll matters will be able to handle these issues with ease. But if you’re not familiar, you need to pay attention to what your responsibilities are and which rules you have to follow. Spend some time reading up on compliance issues and make sure you understand issues like payroll taxes, wage garnishments, recordkeeping requirements, and more. You don’t want to get caught out because you missed something you should have done.
Collect Important Information
You need to have all of the relevant information for taxes and everything you need to know about your employees. All employers need to have an employer identification number (EIN) from the IRS so that they can fulfill their tax obligations. You might also need a tax ID for the states that your business operates in. Collecting essential information from your employees is a must too. They will need to fill out the correct tax forms so that the right federal and state taxes are withheld from their wages. Freelancers and contractors will also need to fill out the relevant forms.
Get Essential Payroll Tools
Payroll management is a lot easier when you have useful tools to help you out. There are several types of software that can make payroll simpler and save you time and trouble. You can make use of employee time tracker software to keep track of the hours your employees are working and ensure you pay them correctly. You can integrate different tools with each other, connecting accounting software, payroll software and even HR software so that you can manage all payroll and employee information in a single system.
Calculating Pay and Taxes
You will need to calculate your employee pay and taxes every pay period. Working out gross pay for your employees may depend on various factors, including whether they’re salaried or paid hourly and whether they’ve worked any overtime. You will also have to work out what needs to be deducted from their pay and calculate their net pay before filing and reporting taxes. Of course, all of these tasks are much easier to manage if you have the right tools to help you out.
Managing your own payroll can be time-consuming but it can also save you money and put you in control of your finances too.