Payroll setup is a process that every startup has to undergo at some point. Many business owners aren’t familiar with this, and may delegate the task to a manager or HR staff member. Regardless, it is important to familiarize yourself with the steps involved as payroll is one of the most important aspects of your business.
The Five Most Important Things You’ll Need To Do
There are five fundamental things that must be done to establish payroll. The first of these is to setup a system where your employee’s paychecks can be directly deposited into their bank accounts. Few people these days want to deal with the hassles of carrying around checks, and having to drive to the bank and stand in line. Cash is convenient but can be risky to carry, particularly in large amounts. Direct deposit is a necessity for most modern businesses.
The second thing you’ll need to familiarize yourself with is tax withholding and how it can be changed in the future. The third thing that you must decide is whether you will handle the payment of local taxes personally or can the payroll system do it on your behalf? The salaries of your employees will be subject to a variety of taxes, some local and some federal, and when hired they will have questions about this. This is the fourth thing that must be considered since as the employer it is your job to be able to answer them.
The fifth factor that must be considered is what your employees should do if their direct deposit does not arrive in their account when it should, or they lose their check (if you still pay them this way). You should have a process in place to help employees in this situation, and they should be able to promptly contact someone for assistance.
Additional Tips For Establishing Payroll
You will need to select a pay period for your workers. This can be weekly or every two weeks, and you should know the advantages and disadvantages of either option. You will also need to get an EIN, or employee identification number. The Internal Revenue Service can provide you with one and you can then use it to establish your payroll.
It is also important to familiarize yourself with federal and state laws. Does the local government need an identification number to complete taxes? If you’re having trouble getting this info, you could always speak with a tax expert. It will also be a necessity to pay close attention to the documentation for your employees. When hiring new workers they will be required to fill out the W-4 form for income withholding. This is important as it ensures that the correct taxes are being withheld when they are paid. The final step is to select a payroll processor that will give you the needed assistance irrespective of your location. TRAX Payroll is a noteworthy provider.