There a lot of fantastic advantages to running your own business. You get to be the boss, set the hours, and chart your own path to success. You get to reap the benefit of the choices you, and you alone, make. That’s pretty satisfying work.
Most small business owners would agree: they are consistently found to be some of the happiest individuals in the country.
However, there are a lot of challenges to overcome as a small business owner as well. Handling payroll is a big one, especially if you’re new to it. Need some payroll advice to help you get set up in the best way possible?
Read on and we’ll walk you through some key tips that should help make the process go smoother.
- Register For an EIN Early
So, you want to set up an official payroll for your company. In order to that, you’re going to need to register yourself with the fine folks down at the federal government.
Yes, your business will need an EIN, which is short for the Employer Identification Number. This number essentially works the same for your business as a social security number does for an individual. This is a way the government can identify you and your employees for tax purposes.
You’ll want to apply for an EIN as early as possible. If you don’t, it could set back a number of key steps you’ll want to accomplish. This is because, in order to file for licenses, establish payroll taxes, and do a number of other important tasks, you’ll need to provide an EIN.
You likely can’t even open a business bank account without one! Make sure you register right away, as it can take some time before you’re given one by the government. Depending on where you are based, you also might need to get a separate state EIN to alongside your federal one.
Make sure to look up the laws in your area and ensure you are compliant.
- Make a Payroll Plan
Before you launch your payroll, you’ll need to make a variety of decisions that will determine the future of your company. These are big choices and they’ll directly impact how your payroll is set up.
One of the big decisions you’ll need to make is whether you will pay your employees a salary or if you’ll be paying them by the hour. Salary pay can make your payroll process easier, as your staff will essentially be getting the same check each pay period.
You might need to do some research on average salaries for the positions you’re hiring for in order to make this decision. Using a Salary calculator is a good way to do this.
You might end up finding out that salary pay does not make sense for your business model. Paying by the hour will be more complex of a system, but it might be worth it for the money you’ll save over the course of a year.
If you do decide to pay by the hour, you’ll need to figure out how to keep track of everyone’s hours and create an easy system to calculate pay week by week.
These days, many payroll systems can be easily integrated with time cards and timesheets to help streamline this process.
You’ll also want to plan out ahead of time how often your employees will get paid. Will it be weekly, bi-weekly, monthly? This is a big decision to make as it will affect the entire flow of your payroll system.
Generally speaking, the more employees you have, the more difficult it might be to let payroll do its work each and every week. Larger companies tend to have longer pay cycles. Keeping this in mind, you may need to adjust your plan as your company grows.
- Get Real Familiar With Wage Laws
It cannot be stressed how important it is to ensure that your business is compliant with local, state, and federal laws regarding labor. As an employer, you have a number of legal and financial obligations that you need to live up to.
Failure to do so could result in huge fines and potentially even the shutter of your business. It’s not something you want to take a risk on.
What laws do you need to make sure you’re aware of? That will depend on where you are located, and you’ll need to do a good bit of research on your own.
Generally speaking, every business across the country needs to ensure that they are paying proper employment taxes and making accurate FICA contributions. These are the portions of a person’s paycheck that goes to programs such as Social Security.
Local and state taxes, as well as income taxes, also need to be accounted for. It goes without saying but you’ll also need to be sure that your employees are getting paid accurately for the hours they worked.
This is why it might be worth hiring a full-time accountant to stay on top of all these matters. It’s a lot to handle while running the rest of an active business and thus something you may not want to tackle all on your own.
Payroll Advice for New Startups
If you’re planning on launching a new business, there’s a lot of different elements you’ll need to handle, with payroll being a major one. If you’re new to this kind of task, you can rely on the above payroll advice to help you get started on the right foot.
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