Thinking of starting a small business? In 2015, small businesses employed nearly 59 million people. That’s 47.5 percent of the private workforce.

Most small businesses have 100 or less employees. The fewer employees you have, the more likely it is you’re thinking of how to do payroll yourself.

Payroll can be tricky, but it’s by no means impossible. You need to be well-organized and decent at math, among other things.

You’ll save money if you figure out how to do small business payroll on your own. Keep reading to find out how to do payroll.

Running the Numbers

As a small employer, you have a lot of choices. One of the biggest is deciding whether your employees get paid hourly or receive a salary.

Running your own business comes with multiple legal considerations. There are also certain laws about who can be an hourly or salaried employee.

Let’s say you have a business with six employees. Two get paid a salary. The other four get paid hourly.

Your work isn’t over at that point. You need to figure out how the hourly employees will report their hours worked, for instance.

Some businesses require employees to punch a time card. Others take a looser approach by letting employees self-report their time. Either decision can make sense, but it depends on the specifics of your business.

Don’t forget about small business payroll taxes, either. Those taxes include FICA, plus federal income taxes. In all but a handful of states, you’ll also need to deduct state income taxes from your employees’ checks.

DIY Payroll

A few decades ago, figuring out how to do payroll meant sitting down with your files and spending hours doing math on your own. Nowadays, it will still take a bit of time to set up the payroll, but it’s not nearly as time-intensive as it used to be.

For that, you can thank software that makes life easier for small business owners. You don’t have to create each individual paystub by yourself. Instead, you can rely on paystub software to do it for you.

What about the IRS? As a small business owner, you have to report both certain figures to the IRS on both a quarterly and annual basis. There’s also software that can remind you about upcoming IRS deadlines.

When you’re first starting out, it’s tempting to think that you can deal with all the IRS stuff later. But in general, the IRS doesn’t like that. If you’re not careful, you could find yourself on the wrong end of a small business audit.

It’s much better to take a little more time at the beginning of the process and sort everything out. Doing that allows you to make adjustments as you go.

It also allows you to take better care of your employees. Bad business owners are ones who tell their employees, “Sorry, but payroll is running late this week.” Don’t be a bad business owner.

How to Do Payroll Yourself

Figuring out how to do payroll yourself is one of the best things you can do for your small business. After all, you don’t have a business without paid employees.

Want to know more about running a successful business? Check out our business and finance archives for more information that will help you and your employees.

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