Starting a new business is filled with hurdles, some of which you’re bound to trip over. Whether it’s your business plan, your funding sources or even the functionality of your website, you will likely make a few mistakes and a lot of tweaks as you grow.
While you experiment with different ways to generate sales and cash flow, paying your employees is one area where you don’t want any mistakes. Establishing your payroll is an important part of your credibility as a business.
There is no “one size fits all” solution when it comes to payroll. Just as every company is different, payroll also varies, depending on your business and also on the laws in your state. You may be starting off with just yourself, or you might already have a few employees. Either way, you want to start thinking about payroll options sooner rather than later.
Here are five simple steps to start your payroll:
- Set up your EIN – If you haven’t already done so, obtain an employer identification number (EIN), also known as a Federal Tax Identification Number, through your accountant and/or the IRS. This number is used to identify your business entity and you’ll need it for doing your taxes and your payroll.
- Know your state and local laws – Does your state and/or local government require an ID number to process taxes? Do you know what deductions you can take and what expenses you can claim? If you cannot find this information on your own, ask your accountant.
- Get the paperwork started – If you are hiring full or part-time employees, they must fill out federal income withholding form W-4. This will ensure that you are withholding the appropriate federal income tax during each pay period.
- Choose a pay period – There are many options, including monthly and bi-monthly, so you can determine what works best for you. You don’t want to change pay periods regularly, so give it some thought and do your best to make the right decision in the beginning.
- Select a payroll provider – Start off on the right foot by choosing a payroll company, rather than trying to do it yourself, so you don’t have to deal with any costly mistakes down the road. In today’s technologically savvy world, a quick and easy online payroll service will probably be your best bet, so you can obtain the help you need regardless of your location or the time of day.
With these five simple steps guiding you, setting up payroll for your new company does not have to be a challenge.
By Michael Alter, President and CEO, SurePayroll, Inc., a leading provider of online payroll services to small businesses nationwide. Contact SurePayroll, Inc. for a price quote on easy online payroll services.