Making it to Payday

June 6, 2012 · Posted in Accounting · Comment 

Over five million new companies are initiated by people annually. The majority of these will never succeed, nevertheless lots will, and that means there is an overwhelming number of people during each year discovering that they are managing a fastgrowing company and not understanding how to handle it.

Those dynamic companies hire folks, perhaps just a small number but lots of times scads. Overall, small business owners hire more than 50% of all those privately-employed. They pay more than Forty percent of the total private payroll in the nation, and they reliably produce more than 60% of the new jobs every year. Fifty-two percent of these companies operate out of somebody’s family home.

Nearly 75% of all small businesses do not have payroll because they’re just one-man-shops and not going to be successful, and numerous companies limp along employing people as-needed on a 1099, or contracting basis. Virtually all companies that continue to grow have to face payroll in the end, however. Organising a payroll symbolizes one of the very first road blocks a maturing business owner faces.

This can be a very tough time.

Luckily, no special schooling is needed to do payroll. Any intelligent person with a sufficient amount of time on his hands and the ability to read lots of instructions can set up and operate a payroll completely manually. You do not have to have any kind of particular certification to deliver paycheck stubs to your employees. It does, even so, require a lot of appreciation of fine detail.

There’s also no equipment to purchase. You don’t have to use a PC or even a calculator. All payroll obligations can be taken care of by hand-writing checks, generating the proper applications and documents, and sending in fees to the correct agencies.

So just what types of forms are essential to get started with your payroll? Initially you need an Employer Identification Number, or EIN. If you have been in business for a while, you most likely already have one of these. Second you will need to register with your state as having a payroll (this process here varies.) There also may be a local enrollment needed, but right now this local enrollment is limited to a handful of large cities.

Following that you’ll need to obtain form W-4s completed by each of your employees. These give you the data you’ll need to figure out each employee’s paycheck, and they are kept on-file — not mailed to the IRS. You will also need to have them to complete an I-9. This document verifies that they are eligible to work in the United States. They’ll have to present identification to you to complete this form, and you are also mandated to keep these forms filed.

Once you have the appropriate documents completed and you are registered with the right governmental bodies, you’re ready to establish a payroll schedule. Do you have to pay on a specific period, like daily or weekly? Nope, it’s entirely under your control, as long as you pay your employees at least 2 times monthly, and once you select times for getting paid you stick to them. You also need to post this information in a public place.

There are many sorts of deductions and such you’ll need to remove for each paycheck — more than we can cover here. Additionally, there are extra fees you’ll have to pay during your payroll process. Might want to remember this: even if you have no employees and create no paychecks for a certain time period, once you sign-up with the government you’ll still have to file forms or get fined.

Almost anything to do with employees gets complicated because of all the labor law and different bookkeeping approaches you might use, so consulting with a professional should always be on top of your list of things to attend to once you start a payroll. But many people who run businesses cannot afford added expenses, so, for them, an online payroll service is the ideal option. Online payroll services are taking off, and you can find ones that will handle all of the records required and function from your iPhone. Yes, there’s an app for that.

Payroll is a considerable challenge for companies just getting going, but it’s not one that you can’t overcome. Yes, it is possible to do it “the tough way”, learning all the ropes and bulldozing through the applications and instructions. Another choice is obtaining the services of a nearby pro to do the worrying for you and take care of all the heavy lifting. Ultimately, however, most small businesses are switching to online solutions where they retain some control, yet the total expenses and work is much less than the other choices.

If you’re interested in finding out more about payroll requirements for smaller companies, drop by the Lifestyle Business Diary Blog, or, for folks dedicated to doing it on their own, the DIY Business Helper Site.