As a small business owner, you undoubtedly know that payroll matters. Whether you have an in-house department set up to handle it, or you decide to go for payroll outsourcing, making sure that your people and the IRS get paid properly is a big deal. But when it comes to payroll, it’s all about details. An owner that’s sloppy or cuts corners will likely experience numerous fines with the IRS and a bunch of very angry employees.
If you stay on top of the payroll details, you can not only minimize legal and financial risks, but you can also boost your company’s efficiency and record-keeping skills. For an inexperienced small business owner, it can seem like there are an endless amount of details to keep in mind. To make sure you go further professionally, read on for some helpful tips to manage your employee payroll.
- If you’re just getting started, do you know what your EIN, or Employee Identification Number is? Every business must have one of these by law, since that’s how the IRS makes sure they make all of their tax payments and remain in compliance with the law. To get an EIN, simply call the IRS at 800-829-4933.
- Does your state or local government use special tax ID numbers? Sometimes you might be required to not only pay taxes to the federal government and state, but also your local municipality. If you’re outsourcing payroll, your team will have this information. If not, you can do some online research or contact a local accountant.
- One of the smartest things a new small business owner can do is to get information from others about what processes work for them. For other companies like yours, do they handle payroll themselves or outsource it to a payroll service? Do they like the arrangement they have currently, or have they ever changed their mind and options? While their ways may not necessarily work for you, it can be helpful to get a more experienced perspective.
- Not every business pays the same tax rate. You might have to pay more or less depending on where you live, the size of your business, and what kind of business it is. Remember that tax law can change and it’s your responsibility to pay the correct amount regardless. IRS Publication 15 will give you all of the details you need and help you to stay in compliance.
- Is your workforce made up of employees and contractors? If so, are they classified correctly? Proper classification will affect them in regards to unemployment taxes, Social Security, and Medicare.
- If you really want to make your professional life easier, take the time to plan ahead. Consider how you’ll handle retirement contributions, overtime, and vacations for your employees. While you don’t legally have to offer vacation pay to your people, most businesses do so anyway. Happy employees are productive employees.
Ultimately, you don’t have to be an expert in tax law or have extensive experience in payroll to make sure you’ve checked all the boxes. If you feel like you need a little bit of extra help with payroll, or you simply have questions, contact us today.