Ask around and you’ll find that payroll costs and employee pay are one of the biggest expenses of any business. While you might make a fair amount on products and services, you could be paying it all through the nose via your payroll costs.
If you want to learn how to do payroll on your own, just follow these four steps below.
Table of Contents
1. Get Ready to Hire
While you might think that building your company is as easy as deciding you want to hire some people and getting the ball rolling. However, you need to follow the rules before you hire anyone.
Get yourself and EIN. Your Employer Identification Number helps to track all of your payrolls to ensure the IRS calculates your tax payments correctly.
Then you need to decide on how you’ll pay people. You can choose to pay them an hourly rate or you can pay them with a salary. Your ability to pay is going to determine the kind of talent that you attract, so make sure to think over your numbers carefully.
Don’t forget to get yourself some worker’s comp insurance to ensure you can cover people who get injured.
2. Get Paperwork Together
You need to set up your new hires in your payroll system. This means you need I-9 forms, W-4 forms, and direct deposit info if applicable.
Your I-9 forms verify that the person you hire can work inside the U.S. You might just need the form with a copy of a driver’s license. However, you can accept social security cards, birth certificates, or any other form that verifies they’re legally able to work
The W-4 form is for the IRS and lets them know how much to withhold the employee and how much to tax them for.
Direct deposit isn’t required by any means but it makes performing payroll easier. IF you don’t want to have to print out checks every week, you get to drop pay right into your employees’ bank accounts without fail.
3. Calculate Checks
Now you have to start recording how much you’re paying people. While you might want to manually calculate checks, you should put a system in place that calculates things for you. It can get sticky when you’re worrying about withholding taxes to send to the IRS.
Make sure you pay your payroll taxes on time to ensure you don’t get in trouble with the IRS. Use a paystub maker to help make this easy.
4. Record Your Numbers
You should have two sets of numbers to record how much you’re spending based on what you have. You should also have another record that’s calculating how much you’re making every single month.
Recording payroll means that you need to set up your chart of accounts first. You won’t have anything to pay unless you set up your chart of accounts.
Learning How To Do Payroll Takes Practice
You’re going to hit lots of challenges along the way when you’ learn how to do payroll. However, if you do it yourself you can save money. So long as you pay attention to the details, you shouldn’t have a problem.
To keep making enough money to pay your staff, follow our guide to making your customers happy.
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