If you work for or own a small company, you know how hard it can be to organize your payroll information into an orderly and automatic system. However, a payroll system implemented in your business can go a long way in reducing stress and promoting organization within the office. And what's more, you will have more satisfied employees who get their paychecks consistently and on time. Here are some quick tips to setting up an office-wide payroll system.
If you haven't already, make sure you have an EIN or employer identification number -- it's kind of like a social security number for businesses. You will need this number come tax time, and you should not be paying employees without it. Simply apply for it with the IRS. You may be required to have state identification number as well.
Once you have that, you're ready to begin. You will need to classify your employees as full time or as contractors. Employees will need specific taxes withheld on their pay checks, while contractors take care of their own withholdings.
You'll need to specify which of those working for you are having withholdings taken from their paychecks. Furthermore, those employees need to fill out W-4's, government forms that explain the withholdings and allowances that you are implementing with that employee. This form should be filled out and signed as soon as you have a new employee join your team, for tax purposes.
Once you have all of the paperwork and tax information squared away, you can get to work with your payroll system. Consider government accounting software in order to track your payroll as well as salaries, wages and other business aspects like inventory and purchases. Accounting software is an accurate way to track your payroll and keep it organized.
Decide on a pay period. Most prefer a traditional bi-weekly approach, while some may only want to pay out once a month or base it on when the company contracts are paid out. Keep in mind that most states regulate the pay period to twice a month, and many companies choose to pay on the first and fifteenth of each month.
Finally, be consistent with your payroll system. It will only work as well as you put time into it, and employees must be paid according to your state's laws. Payroll and accounting software can help you stay organized, and you'll have satisfied employees that are more productive.
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