Are you in the process of starting a new business? You’ll quickly find that there are many more steps involved than you could have imagined. One of those steps is getting your payroll set up so that you can compensate your employees. When you begin hiring employees, you’ll find that they have many questions regarding their pay: when do I get my first check? How can I set up direct deposit? How do I change my tax withholdings? It’s crucial that you have a payroll system in place and that you’ve given it some thought before launching your business. If you’re new to running your own business, you may not even know where to start when setting up payroll. Here are five steps to follow to get your payroll up and running.
Request an employer identification number
Before anything else, you need an employer identification number (EIN) assigned to your business. You’ll need to contact the IRS to get an EIN. You’ll use it a lot as you go through the process of setting up payroll so you can’t skip this step and come back to it later.
Check state and local laws
Different states and local governments have different laws when it comes to processing taxes. You may need to talk to a tax professional to learn the ins and outs of the laws in your area. Find out if your state or local government requires an ID number to process taxes.
Collect necessary employee paperwork
Whether your employees are part-time or full-time, they will all need to fill out a W-4 which outlines their federal income withholding. This will ensure that you’re withholding the appropriate amount from their paycheck each pay period. Keep employee paperwork in a safe place where it won’t get lost so you always have a record.
Choose a pay period
Employees want to know exactly when they can expect to be paid each month. It’s important to choose a pay period and stick to it. You can choose from many options including monthly, bi-monthly, every other week, etc…
Select a payroll provider
Finally, consider choosing a payroll provider to handle your business’s payroll services. Though you can try to handle the payroll on your own, chances are you already have enough on your plate trying to launch a successful new business.
A great option to consider is partnering with a professional employer organization (PEO). Not only will they handle all of the payroll services for your business, but they can take on any number of human resource services so that you’re free to focus on running your business without having to worry about the time-consuming administrative tasks.
Source: CPA Practice Advisor