As a business owner, one of the administrative tasks that you need to know how to handle is the preparation of the payroll. At the end of every month, you will be required to do payroll when paying your workers. Payroll preparation is not usually a headache for well-established businesses since they can afford to outsource the services from the experts. The fact that you have access to limited finances means that you should do it yourself so that you can lower your operating costs. In as much as payroll preparation is a complicated process, and you can do it yourself successfully if you employ certain tips. However, you should be keen when doing payroll since mistakes on paychecks can lead to problems with your employees. The article herein is a step-by-step guide on how to prepare payroll yourself.
The first step to doing payroll is having your employees complete W-4 forms. W-4 forms are for employees, while W-9 forms are for independent contractors. A W-4 is a crucial document that gives your employees the chance to keep records of their allowances. This way, they will get to pay less in payroll taxes. Having an EIN number is one way to inform both the IRS and Federal Government about the existence of your business and tax compliance. In this site, you will read more info. regarding the steps for getting an EIN for your business. EIN is usually considered as the social security number of the business.
The next crucial step is doing payroll is having a payment plan. Once you have EIN and tax information documents, it is time that you pick the most appropriate day to pay your employees. The decision regarding the payment schedule for your business should be influenced by what you are aiming for. Once you settle for a payment date, you should strike to get the money ready on the date. There is also the option of involving your employees when deciding on a payment plan. Most employers are afraid to do their payroll themselves because of the stage that involves the calculation of gross pay and deductions. It is the stage that you are likely to make a mistake when preparing your payroll. Luckily, there are online tools that you can use to calculate both gross pay and deductions for your employees. On this site, you will discover more about the ways of doing gross pay and deductions calculations.
Finally, you should file your tax forms. The IRS requires every employer to withhold the right tax amount from every employee’s pay. Filling tax forms will ensure that you don’t get into problems with the IRS. Delaying in remitting and filing tax forms usually attract huge fines; hence you should do it on time. As a business owner, if you want to do payroll yourself, you should follow these steps from now!