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Setting up a small business – Here’s how to manage payroll
It’s thrilling to own and manage a business, but when it comes to payroll management, you realize how daunting things can be. Any mistake on payroll can create serious financial trouble and directly impact your taxes. Managing payroll on your own means you have taken on the responsibility to withhold and deposit payroll taxes, among other things. So, here’s a concise guide to understanding how to manage payroll for all small business owners. Collect payroll information If you’re a small business owner, the first thing you need to learn is setting up a payroll. To do this, you need both the employer and employee information. Employer responsibilities Employers need to apply for an Employer Identification Number (EIN) before they start hiring. EIN is necessary for tax documentation purposes. Then, you’ll need to register with the Electronic Federal Tax Payment System (EFTPS) to pay federal taxes. Depending on your state, check whether you need employer ID numbers for state and local governments and register at the state’s new hire reporting website. Decide the pay frequency and the payment method beforehand. You might need the employees’ bank account details to make the payments. Know your employee’s salary status, for which you must check whether they must be paid overtime wages.
