Payroll in 3 Steps
In honor of it being National Payroll Week, I thought this was a good jumping off point for a series of blogs on the topic that might demystify some of the questions about what it means to run payroll for your business. Whether doing it yourself, using your accountant or outsourcing it to a service, there’s some things you should always keep in mind.
First off, let’s look at the three most essential steps to handling a payroll. It’s more than just writing checks.
- Calculate payroll – Once you’ve figured out your employees’ hours and wages, you need to take the necessary deductions for all federal, state and local taxes. You’ll also need to withhold funds for benefits and garnishments.
- Process payroll – Your employees, of course, need to get their money. Once you know each employee’s net pay, you can either create paper checks or pay them through direct deposit, which is usually the preferred method.
- Set aside required tax funds – You’ll need to know how often you’re required to make tax deposits. In order to remain in compliance and out of hot water with the IRS, you’ll need to stay up to date with federal, state and local tax laws. If you’re using a service, make sure they have a method for keeping you up to date as well. The good services will.
In the next post we’ll talk about some common payroll mistake that you should avoid.
Michael Alter, payroll expert with an MBA from Harvard Business School, is a nationally recognized spokesperson providing thought-leadership and sensible advice to help accounting and payroll professionals build deeper more profitable relationships with clients. Alter, President of SurePayroll, writes the Trade Secrets column on INC.com and is frequently published in Bloomberg TV, the Wall Street Journal, and Entrepreneur Magazine.