Whether you’re just starting your company with full staff or you’ve been in business for a while and just adding an employee to the mix, setting up your payroll can be overwhelming for the first time. If you go to DIY payroll, you can find below the information you need in order to start payroll and what queries you can expect from your new employee.
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Obtain an identification number of the employer (EIN).
EIN is used to identify a corporate entity. The IRS makes applying for an EIN simple and you can apply online, by fax, by mail or by telephone. The only exception if you’re a sole proprietor that doesn’t need an EIN.
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Know the tax laws for local, state and federal government.
Not that fun fact: tax laws are constantly changing, and failure to properly pay taxes can result in heavy fines. You will need to be aware of all tax laws that you are required to follow, including local, state, and federal taxes, when you are running payroll, and you are withholding the proper amount from pay checks.
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Stay on top of the documentation.
You will need to get completed FormW-4 with each new hire. Form W-4 is used for workers to choose their employment status. You need this form as an employer so that you can withhold the correct amount of taxes from paychecks. You’ll want to speak with your employee(s) at the end of each year to see if any improvements to FormW-4 need to be made. This is an important step because the data from that report will be used to file Form W-2 that employees receive so that they can file federal income taxes.
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Choose a schedule for payroll.
There are four types of pay schedules: daily, weekly, bi-weekly, and quarterly. There are often regulations that you may need to be aware of that may affect your payroll schedule. Pay schedule requirements, for example, vary by state and you may not be able to choose the schedule you would like.
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Mark all the Due dates on time.
Apart from paying the right amount to your workers, payroll also includes paying taxes. Some may only have to pay taxes once or twice a year, depending on the type of business, while others may have to pay annually. As with most items, missing these due dates can result in fines and penalties, so when you setting up payroll, you’ll like to plan all your due dates and make sure you’re not missing a deadline.
Setting Up Payroll: Conclusion
While it can be overwhelming to set up payroll for your new business, it doesn’t have to be an impossible task. If it becomes too daunting at any point to run payroll on your own, you can always contact Nuage Digital and consult for a professional advise.
