Hiring the first employees is always an exciting time, but it comes with its fair share of tasks, including paying them. Here’s how to set up payroll.
As a startup owner, you may be excited about hiring employees and building your company. However, understanding the basic payroll terms is vital to running your business.
Outsourcing your operations may seem like the best option, but you should consider setting up payroll. It can help you save money and build capital for your business. Don’t know how to start paying your employees?
We’ve got you covered. We’ll tell you everything you need to know about how to set up payroll. Read on for your guide to start paying your employees today!
Your Ultimate Guide to How to Set Up Payroll
Learning how to pay employees may seem complex, but it all comes down to your plan. It’s vital to take all the necessary steps and follow the applicable laws down to a T.
Don’t know how to set up employee payroll? Here are the steps you should follow to start paying your employees in no time.
Set Up Your Payroll Schedule
Setting up payroll starts with choosing your payroll schedule. When are you planning on paying your employees? You may pay them on a weekly, bi-weekly, monthly, or twice a month basis.
You should keep in mind that not all employees are eligible to be paid on the same schedule. It’s important to take a look at the applicable federal and state regulation before choosing your payroll schedule.
Gather Your Employees’ Information
Before you can start paying your employees, you must gather your employees’ information. Their full name, address, date of birth, Social Security number or EIN, and date of employment are some of the details needed to run your payroll. During this process, you should also gather your employees’ W-4s, W-9s, and I-9s.
The first form will provide information on your employees’ tax withholdings. You’ll request W-9s from your independent contractors to certify their eligibility for employment. For certain employees, you’ll ask them to complete I-9 forms to verify their identity and eligibility to work in the United States.
Figure out Your Deductions
Now it’s time to classify your employees based on the provided information. If you hire independent contractors, you won’t need to withhold any taxes. For all hired employees, you should follow the tax deductions classification from their W-4s.
Make sure to determine the Social Security, Medicare, and Unemployment federal tax withholdings. Keep in mind that you may need to withhold taxes on a state basis as well. If you’re unsure, we recommend you consult a tax expert for more information.
Run Your Payroll
After getting all your ducks in a row, it’s time to run your payroll. You may use an accounting platform or do it by hand. Either way, you need a pay stub maker to create your employees’ paychecks.
When you run your payroll, it’s important to make sure you make all the necessary tax payments and filings. If you don’t make them on time, the federal and state agencies may penalize your business.
The Bottom Line
Setting up payroll may seem daunting to newbie and seasoned startup business owners. However, it all comes down to following the right payroll setup procedure to keep your accounting records in order.
We’re confident that if you follow our how to set up payroll guide, you’ll be paying your employees in no time. If you’re unsure about setting up payroll, you should consider consulting with an accounting expert.
Want to learn more about improving your accounting operations? Read The Startup Magazine Finance category for more interesting articles.