Most business owners aren’t particularly fans of handling payroll themselves, however it may be best if you aren’t over a lot of employees. It can be a bit of a daunting task but it doesn’t have to be complicated. Here is a quick run through of how to process payroll on your own:
#1. Completion of W-4 Forms. To get paid, employees first need to file a Form W-4. This helps keep track of their allowances, and also documents their filing status. The more dependents and allowances your employees have, the less payroll taxes will be deducted from their checks per pay period.
#2. Provide your EIN number. In order to start payroll, you have to ensure that your EIN is established. The IRS needs to identify your business and an EIN helps with doing so. If you don’t have one yet, you can apply for one at www.irs.gov
#3. Create a payroll schedule. This is very important as this helps to keep everything organized, hassle free, and in working order. You need to mark your calendar for employee pay dates, tax payment dates, and deadlines to file taxes.
#4. Calculate numbers and subtract deductions. Before paying your employees, you need to calculate which Federal and state taxes to withhold from their checks. Simply subtract pre-tax deductions then, deduct employment taxes. Last but not least, withhold post-tax deductions. Along the way, be sure to keep tabs of both employer and employee portion of taxes.
#5. Distribute payments. Pay your employees using either check, direct deposit, or pay cards. Whatever method works best.
#6. Pay your taxes. Send in employer tax returns and state or local returns if applicable. Also be sure to prepare to file your annual filings and W-2’s at the end of the year.