At the basic level, it’s actually quite simple—payroll is just a system for keeping track of your employees’ time and paying them for it. As your company—and the number of your employees—grow, you’ll have more and more payroll calculations to do for sick days, holidays, vacation, different pay scales and rates, and don’t forget to take into account any overtime that has been worked.
It’s up to you, the small business owner in Utah, to ensure your employees get paid on time and have the correct amount of taxes withheld from their paycheck. Even if you plan to use payroll software or a payroll service it’s good to have completed the following:
- Obtain an Employer Identification Number (EIN) from the IRS. This is actually a step you need to have completed before you hire any employees—so hop to it if you’re behind! You can apply online with the link above or call the IRS.
- Have each new employee fill out a W-4 form (issued by the IRS). This will let you know how much federal taxes to withhold from your employees’ paychecks. Other forms you may need to use arethe I-9, W-2, and the W-5 forms, depending on what type of employees you have (e.g., independent contractors versus salaried employees).
- Have a standard timecard system for documenting all employees’ hours. Keep track of every hour your employees’ work—even if they’re independent contractors. There are several free timecard templates in Microsoft Word or Excel.
- With your timecard system, have a set pay schedule. It can be every two weeks, twice a month, once a month, etc. This will of course need to be determined by you and depends on your cash flow.
Keeping on top of payroll requires time and organization, but should not take the bulk of the time you spend running your business. There are many other aspects of your business to worry about. In many cases, it’s a good idea for small businesses to use payroll software or outsource their payroll and HR processes to a payroll service.
We’d love to help you with your payroll questions. For more information on withholding taxes from your employees’ paychecks—or any question on taxes, payroll, bookkeeping, and human resource management for small businesses, leave us a comment or find us at http://www.qualitypayroll.net/html/services.html.