How To Run A Business: Payroll Edition
It can be exciting to open a small business. It starts with the germ of a great idea which grows into a business plan. If you are considering doing this in our home state of Texas, it is good to know that the Texas economy is the ninth largest in the world. In addition, according to the Texas Department of Economic Development, Texans enjoy one of the lowest tax burdens in the U.S.
Payroll begins with the hiring of your very first employee. It refers to paying your employees which includes keeping financial records for payroll, calculating employee paychecks and yearly records of your employees wages.
Ultimately, payroll is a complicated process and can be your largest expense. You have to keep up with each part of payroll as well as be up to date on all of the federal and state labor laws and tax laws. Whether you choose to hire an experienced payroll manager or choose to outsource your payroll with Slaton Financial Services, it is good to know the basics.
Employee Identification Number
Before you hire any employees, you need to secure an EIN or employment identification number from the Internal Revenue Service (IRS). The EIN is usually called your Employer Tax ID. You cannot report taxes or other important information to the IRS without the EIN. You can apply online or contact the IRS to obtain the number.
You will want to make sure you have basic contact information on each of your employees including their legal name and social security number. In addition to this each employee must complete a W-4 form, which is the Federal Income Tax Withholding Form. Without this, you will not know the correct income tax to withhold from your employee.
Know Your State Requirements
When you are an employer, you have to become familiar with changing requirements for business like overtime rules, sick pay and other regulations. Texas state requirements may be more lenient than some states, but they are still a legal hurdle you have to jump.
You have to set up a monthly or bi-monthly pay period for your employees according to your state’s requirements. There are many rules that you need to know. For instance, the IRS requires employers to withhold income tax for the pay period even if the worker doesn’t complete the pay period.
You can manage your payroll in house or you can choose to outsource it. If you choose in-house, you will need to research the many options for a payroll system. Take time to ask other owners the methods they rely on and what tips they would recommend. There is no need to reinvent the wheel for your small business.
After you have all of your employees’ information, you can begin the process of running payroll. You can enter it into the payroll system you chose or with outsourcing, give the information to Slaton Financial Services.
You will need to be familiar with the IRS Employer’s Tax Guide for your federal tax requirements as well as your state’s guide for their filing requirements. You have to provide reports throughout the year. Paying attention to detail and accuracy is very important when filing your employee tax information. Not only can mistakes cost time, they can also cost money.
With the basics of payroll understood, you can choose to run payroll manually or outsource it to a payroll service provider. Manual can be a typical choice for small businesses. Be aware that the process can be very time consuming and complicated. Finding this to be true often leads to the realization that manual payroll may not be best for your business.
Outsourcing payroll can be done with us at Slaton Financial. This option will give you more time and money to focus on your business without having to learn what our North Texas area experts are paid to know — all of the changing rules and regulations for Texas payroll and tax preparation. We already have our experienced financial staff along with expensive software at the ready to take care of your payroll needs.
Contact us today and let us discuss payroll options for your business, small or large, as well as other needs you may have that we offer. The goal is to save you time and money, so that you can focus on growing your successful business. We look forward to talking with you!