Entrepreneurship is incredibly rewarding and fulfilling, but there are always some parts of the process that may not be as fun and that may be out of your area of expertise. Payroll is one of those necessities that many people handle incorrectly because they do not follow some critical information. Your small business deserves to prosper and grow with your creativity and vision without payroll problems getting in the way. To handle your payroll with no problems, follow these tips below.
#1: Make the right decision on paying your staff either by the hour or by salary
Deciding between salary or hourly employee payment is one of the first decisions you must make and is the most important. Salary is easier to pay out because you set a flat rate and won't have to worry about any sort of fluctuation. If you do decide to pay by the hour instead, maintain a strict system to keep this organized.
#2: Hire a professional company to do your payroll
Many small businesses make the mistake of attempting to do their own payroll, but then wind up in a mess that must be sorted out later. If you don't have an accounting background, do yourself a favor and hire a professional who can handle the calculations and also file your payroll taxes in a timely manner. This takes a lot of stress out of your daily operation and ensures that the work gets done properly.
#3: Budget all of your taxes ahead of time and automate payments
Set up a budget that allows you to pay both your state and federal payroll tax on deadlines. You must also match Medicare and Social Security allocations, which equates to roughly 7.65% of gross payments. To stay on top of your taxes, the payroll company that you hire can allocate automatic state and federal tax payments. This streamlines the process and lets you rest assured that you won't get hit with expensive tax penalties later.
#4: Maintain a bank account that only your payroll company can access
In order to set up your estimated tax allocations, you need to keep an account strictly for that purpose. This way, you won't have to worry about accidentally spending out of the account and dealing with discrepancies and overdrafts. This lets you avoid late tax payment penalties and keeps your account records clean.
These four tips will get you started on payroll and will help you to avoid important mistakes. For more information on payroll services, contact companies like Waggoner Frutiger & Daub CPA's.