Running a small business is fun until you get to the finances of it. So, irrespective of if you have one employee or 20, having a payroll helps streamline the finances of a small business to a certain extent. It will also save you the harsh penalties of the IRS and help fulfill your legal responsibilities towards your employees. So, if you are planning on starting a payroll for your small business, here’s how:
Apply for an Employer Identification Number (EIN)
Before you even start building a payroll for the small business, you need to obtain an EIN. This is a rather simple process. You can apply for your EIN online on the IRS website. Use the EIN number to file taxes.
Learn all about the department of labor for your state and its rules
Different states in the country have different laws regarding labor. So, you must take into account both the Federal and State laws before you start creating payroll for any small business. If you have any doubts, get in touch with an accountant or a lawyer who works with labor laws.
Set up your payroll schedule
To keep the inflow and outflow of cash for your small business steady, decide on a schedule for employee payments. You can opt for biweekly, weekly, semimonthly, or bimonthly.
Apply for the state’s withholding and unemployment insurance accounts
Depending on the state, you need to apply and withhold state income taxes and pay them into an unemployment insurance fund. Once you’ve figured out what tax accounts are needed, you have to apply for them online.
Write the employee handbook
Before you get down to the hiring process, you need to have a handbook in place. Write down the rules, regulations, compensation, and more regarding employees. Get it vetted by a lawyer to confirm.
Hire your employees
Done creating all the right accounts and filing all the right papers? Time to hire your first employee. Ensure they fill out all the paperwork as required.
Implement a running payroll system
Finally, you get down to implementing a running payroll system for your small business. For most small businesses, it makes sense to opt for an online payroll system rather than getting an accountant on board. But, how do you know which ones are the best?
Online software that help setting up payrolls for small businesses
We know that having an online software is better for small businesses, but there are some who give limited services while there are others who will even help you file your taxes and streamline your payroll system.
Intuit comes with a wide spectrum of payroll packages which makes it amazing for small businesses. They are America’s #1 payroll service.
It will immediately file your local, state, and even federal taxes for you. It also comes with the added benefit of integrating with your accounting system.
The prices for this software are undisclosed. They come with a complete suite that contains both accounting and HR tools. It also comes with health, life, and disability insurance.
Another application that has loads of payroll packages that are priced based on your business.