10 Steps to Setting up Payroll: Do You Need Help?
You’re a new small business owner with plans to hire at least one or two people right from the start. You know that sole proprietors don’t have to worry about payroll administration, but you will not be operating as a sole proprietor. You’re going to need to go through the step-by-step process of establishing a payroll system to ensure your employees get paid on time and you comply with all state and federal tax obligations.
If you pop on over to the U.S. Small Business Administration (SBA) website, you will find that they offer a brief explanation of the ten steps necessary for setting up a payroll system. The document is lacking a little in detail, but there’s enough information to get a broad view of what the law requires.
Here’s a question for you and every other small business owner trying to set up payroll for the first time: do you need help? If so, that’s perfectly normal. There is a lot that goes into setting up payroll despite the fact that the SBA’s ten steps don’t provide a whole lot of detail. The good news is that there is plenty of help available by way of online payroll services.
Setting up Payroll Made Easy
An online payroll service can help set up payroll by walking the business owner through each of the steps. Some services even go so far as to handle everything from start to finish. It just depends on the level of service the business owner wants to pay for.
Even after payroll has been set up, an online service provider can make the business owner’s life easier by offering a list of services that make payroll processing as simple as can be. For example, you could contract with your payroll provider so that all you have to do is enter hourly wage information once per week. The payroll company does everything else – from paying employees to withholding taxes to filing scheduled reports.
If you are not sure of whether you need helpor not, take a look at these three steps directly from the SBA website. If what you read here seems completely foreign, you’re probably a good candidate for working with an online payroll service.
1. Determine the Status of Employees
The IRS distinguishes between employees and contractors. It’s important you know the status of each of your employeesfor the purposes of withholding and paying taxes. The problem is that the IRS distinction is sometimes ambiguous. There are a lot of gray areas that can make understanding employee status somewhat difficult.
2. Choose a Payroll System
Business owners have to decide how they are going to process payroll at the end of every pay period. In the modern era, a software solution is the best option. Business owners can purchase off-the-shelf software or avail themselves of the software packages offered by online payroll services.
3. Report Payroll Taxes
Employers are required to withhold certain taxes from employee paychecks and pay those taxes, along with their contributions, on a regular basis. Failing to comply with payroll tax reporting payments can get a company in trouble.
These are just three of the SBA’s ten steps to setting up payroll. They are perhaps the most difficult steps, which is why they are listed here. As a small business owner, you have a responsibility to payroll processing. Do not be afraid to ask for help from an online payroll service if you believe doing payroll in-house is more than you can handle. Outsourcing payroll to an online service is nothing to be ashamed of.