There’s more to payroll preparation than writing a check. Even if you only have one employee, you likely won’t want the hassle of processing payroll yourself. With W-2s, Social Security, Medicare and tax payments, payroll requires expertise and time, regardless of the size of your business.
Most small businesses at minimum need a bookkeeper or payroll service to assure that paychecks are correct, all appropriate taxes are withheld, and payments are made on time. It requires attention to detail, meticulous recordkeeping, and comprehensive knowledge of the current tax code.
By The Numbers
Upon being hired, each employee has paperwork to fill out, including income tax withholding forms as well as information for retirement and health insurance plans, if offered. You need to track each employee’s status in terms of salaried or hourly, full or part time. You might also need to have a system in place for compensating independent contractors (freelancers).
Time is money
Before you can calculate an employee’s paycheck, you need the most basic information. How many hours did your employee work? You need a system to track time, whether you use a paper form that is filled out manually or a digital punch clock app.
Once the number of hours is determined, the gross wage can be calculated. That’s merely the first step, however. Deductions come next:
- Federal and state income taxes need to be withheld.
- Employee contributions to health insurance or retirement plans need to be deducted along with any other benefits.
- Social Security and Medicare payments need to be deducted.
- And all those deductions require payments to the appropriate agency.
Payroll preparation not only includes employee paychecks but also payroll tax reports to the IRS. And payroll along with IRS tax payments and reports all have to be prepared and delivered on a timely basis no matter what other business matters demand your attention.
As a small business owner, you have to decide where to put your passion, energy and time into your business. Spending it all on payroll preparationsimply doesn’t make sense.
Contact Quast, Janke& Co. with all your payroll preparation concerns. Our accountants can get your payroll set up and running so you can get back to the business of making money.