Table of Contents
Are you a business owner who wants to handle your payroll in-house?
Processing your own payroll can save you money because you will not have to pay a third-party service to do it for you. But taking care of your payroll is an important responsibility that you must peform the right way!
Read on to learn more about how to set up employment payroll for your company!
Obtain an EIN
The first thing you must do before beginning to process payroll on your own is obtain an employer tax identification number. This is commonly referred to as your company’s EIN.
But what is the significance of this number?
Your EIN is an important identifier that you will use to report payment information to the IRS and state agencies for your business.
Receive a Local Business ID
Before payroll preparation begins, you may also need to receive a local business ID number.
The need for this information varies based on the city and state where company operates. To be on the safe side, you should speak to your local tax collector’s office to see if you are required to obtain a local business ID or not.
Collect Employee Information
In order to pay your employees, you have to have their proper identifying information.
Some of the information you need to process employee payroll is your employee’s full legal name and current address. Other information includes their social security number (SSN) or EIN, and W-4.
One important document to have on file is an employee’s complete W-9. This is the form required by the U.S. government to ensure that someone is eligible for employment in the United States.
You should classify your employees by their payment status for payroll purposes.
This is important so that you are properly calculating their compensation information before you handle payroll.
Depending on the size of your company, there can be a handful of employees or hundreds. It is crucial that you classify employees properly so that they are compensated the correct amount and there is no delay in processing payment.
Your employee’s classification can be included on the stubs they receive and you create at sites like https://www.paystubcreator.net/.
Determine a Pay Period
Whether your employees are salaried or hourly, you need to determine a pay period that works well for your business.
Some companies pay their employees bi-weekly, while others process payment on certain days of the month, or monthly.
It’s important to remember that bi-weekly payment is different paying someone twice per month. In a bi-weekly payment model, you may have to process paychecks three times in a month. This all depends on where the weeks fall in your payroll cycle.
If you choose to pay your employees monthly, it will make things easier on you but can also put a financial strain on your employees as they wait longer to get paid.
Wrapping Up: Employment Payroll Concerns
Before you begin employment payroll, you should take the time to make sure you are going about it the right way.
This can help you to be more confident as you take on this project in your business.
Are you interested in learning more about helpful ways to improve how your business operates?Check out our blog post on the ‘Benefits of Automated Invoice Approvals’!