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Think of the last time you had all the answers: Pretty hard to think about that time, right? The reality is, we don’t always have the answers to everything. The same can be said with business.
We don’t always have the answers to everything, but if we have all the facts, we will be able to make better decisions.
So, what do you need to know about the payroll services for small businesses today? We’re going to break down some of the things you need to know before deciding whether or not you’ll do it yourself or outsource this aspect of your business.
Payroll services for small businesses: In house or outsource?
There’s no doubt about it, the more things you keep in-house, the more money you’ll save and the more control you’ll have. If you decide to process your company’s payroll, nothing wrong with that, especially if you know what you’re doing.
You may even go as far as hiring someone to handle your payroll and your bookkeeping at the same time.
However, if you have no idea what you’re doing, then you may put yourself and your business in jeopardy. Why? Simply because, you may not be in compliance with what the laws require when it comes to processing payrolls.
Being compliant is synonym of following the rules established. The IRS is not forgiving when you make errors. Getting it wrong could cost you time and money. The best thing to do is to rely on payroll services for small businesses to help you and to help undo any of your mistakes.
Types of employment
Another thing that you need to be aware of is that there are different types of employment.
- Full-time & Part-time Employees
- Casual Employees
- Apprentices & Trainees
- Commission & Piece Rate Employees
Why knowing the different types of employment important? You’ll need to understand how to pay them, how to withhold taxes etc.
Say that you have a full time or part-time employee, as an employer it’s your responsibility to withhold the right amount of income taxes (Federal, State, Local).
In addition to that, let’s not forget your responsibility to withhold for Medicare, Social Security and your own contribution to these funds. Let’s not also forget the Unemployment taxes and other taxes related to payroll depending on your state regulations.
As you can see, lots of taxes to think about and let’s face it, we are humans and we make mistakes, therefore, if you don’t know what you’re doing, you will make mistakes.
So, when it comes to the task of withholding taxes, payroll services for small businesses like Wagepoint is definitely a good option. By taking over this aspect of your business, you’ll have the peace of mind knowing that your employees are taken care of.
Full time or part time employees may be paid hourly or salaried, and that can also affect how you process payroll. Your hourly employees have to track their time by means of a timesheet or a time-tracking software.
The Fair Labor Standards Act regulates things like minimum wage and how many hours employees can work overtime. Following these guidelines are crucial.
In addition to that the FLSA, there are many states with their own minimum wage and overtime laws. Following these are also very important and crucial. Again, making mistakes will result in unwanted fees by the IRS and time wasted fixing these errors.
When it comes to salaried employees, they get paid a set amount per month/year. One important point to retain is if your salaried employee makes more than $23,600 per year, they will not be subject to the minimum wage laws and overtime rules.
If you don’t know any payroll services for small businesses, Akuracy can help out from that standpoint. Although we don’t process payroll, we’ve partnered with the most trusted payroll services for small businesses in order to keep your business free of errors.
In addition to providing online bookkeeping services, we pride ourselves in providing the necessary tools so that your business can succeed.
We don’t mean to scare you away, but there are more things to keep in mind even after understanding all the above points mentioned.
Have you collected all the required information from your employee?
- IRS Form W-4 or W-9
- Social Security Number (Valid)
- IRS Form I-9: Proof that they have the right to work in the U.S.
- Name, Address, Filling Status
- Personal Check (Voided, if processing direct deposit)
TIP: Do you have a separate business account to process your payroll from? It’s best practice to process your payroll from an account separate from your general business account. Your accountant or bookkeeper should at the very least recommend you to set that up.
In addition to setting up a separate business account, you’ll need to also make sure you are reporting everything in timely manner and efficiently.
- Report all your new hires within the timeframe required by your state.
- Reporting payroll tax.
- Provide W-2s to your employees or 1099 to independent contractors.
- Make sure paystubs are available per requests.
This article only went through just some of the things to keep in mind. No doubt, you may have learned a lot, or we might have added more to the confusion.
Where can you find help?
The Small Business Administration – They specialize in everything business related.
The American Payroll Association – The name says it all.
Bookkeepers – You could hire a bookkeeper to help you process payroll.
Gusto is becoming a favorite when it comes to payroll services for small businesses. All you have to do is add/invite your employees and they’ll take care of the rest. Simple enough right!
In conclusion, unless you know what you’re doing, don’t process your own payroll. There are many options available out there to help you with this task.
The last thing you would want is to pay a fine to the IRS because you failed to do something that was important.
Download our free e-book: 5 accounting and bookkeeping strategies for business owners: to help keep the IRS of your back and grow your business.