- Come Up With A Payroll Schedule
Before you make your payroll, you want to fix the dates you’ll pay your employees. Will you pay them once a week, month, or twice a month?
Paying employees once a week could be expensive. Many payroll companies usually charge customers every time they process payrolls. So if your business is a start-up, paying workers every week might not be a wise idea.
Do you find it better to pay workers twice a month on the same day of the week? Most people prefer the first and the third Friday of the month. This pay period is perfect for you if you’ve employed part-time and salaried workers.
What about paying workers once every month? Again for startups, this isn’t an ideal payment option.
However, it’s a decent option for contract-based or freelance employees. Ensure to check with your state to find out if this option is available. This pay schedule has additional regulations.
- Gather Employee Information
Collect the full names of your employees, their dates of birth, addresses, as well as security number. The date of employment is also necessary, plus your employee’s W-4s, W-9’s and I-9s.
The W-4 gives information about tax withholding. If you’re working with independent contractors, you’ll ask for their W-9s. This form certifies that they’re eligible to work. On the other hand, I-9s verifies that employees can work in the United States.
- What Deduction Will You Make?
The next thing is classifying your employees. You don’t have to withhold any taxes for independent contractors. For the hired employees, ensure you calculate the tax deductions with the help of their W-4s.
Find the Medicare, Social Security as well as tax withholding. Depending on your state, you’ll be required to withhold taxes. If you can’t figure out the taxes, seek assistance from an expert.
- Creating Pay Stubs
Once you’ve gathered all the relevant information, prepare to run the payroll. This can be done either by hand or by use of an accounting platform. See the templates of the blank pay stubs to prepare the paychecks.
Enter employees to the software and count their paycheck according to their rate and hours worked. If any taxes are to be held, factor this in. Once all these things are in order, run the payroll.
Ensure you make all tax payments after running the payroll. If you fail to finish in time, the state, as well as federal agencies, may penalize you.
- Create a Direct Deposit
Do you think of setting up a direct deposit for your employees? There will be some waiting period. It will take some time for the bank to receive the request and verify that the money is in your account.
They then have to transfer the funds to all the accounts of your employees. This must be done during normal banking hours, and not on weekends or bank holidays. This broker may be able to assist.
- Solve Any Issues
Track all payroll records. Fill the tax forms so that you can know the amount you paid your employees.
If you work with payroll software, all these records can be accessed and stored. This will make it easy and fast, whenever you need access to them.
- Don’t Misclassify Your Employees
Some starts-ups handle an employee as an independent contractor. Such a mistake is an expensive one for a new business. Startups try to evade costs such as tax obligations, insurance, and sometimes overtime pay.
Avoid misclassifying your workers. This could lead to a wrongful payment and a delay of your worker’s paycheck.
If someone is working for you as a freelancer and you make them an employee, this would land you into trouble.
You need to change the responsibilities of the jobs. Failure to do so, the IRS can hand you a fine for misclassifying a worker.