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Run Your Business Like a Pro:
10 Top Tips for Setting Up Payroll

 

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With unemployment now over 14 percent, millions of Americans are on the hunt for new jobs. Rapid changes in daily life led to a massive shift in the economy, and services like food delivery are in higher demand than ever. Other workers seek remote jobs.

If you're an employer, you should know that quickly setting up payroll has never been more important. Workers are struggling and need their paychecks.

New hires in essential industries are doing dangerous work that keeps society running.

 

This work also enables those more fortunate, like their employers, to stay safe at home. Remote workers adjust to new conditions in the midst of chaos, many on their own dime.

In essence, everyone struggles to pay rent these days, and workers bear the weight of the crisis. If you don't know how to set up payroll, it's time to learn, because most Americans are desperate for cash.

Here are ten tips for payroll set up to get you started.

1. Stick to Set up Rules

It's important that you get started on the right foot, or your entire payroll setup is doomed for failure.

To avoid trouble with your employees and unfortunate situations like audits, double-check your business complies with federal and state regulations before starting the payroll process.

2. Have the Right Accounts Ready

Another vital part of payroll set up is using the proper federal and bank accounts.

To be recognized by the IRS, you need an Employer Identification Number (EIN). You also need an account with the Electronic Federal Tax Payment System (EFTPS), and business accounts not just for revenue, but also to keep track of your hires and to keep tax payments in.

Without the right accounts, you might be suspected of embezzlement or other fraud, leading to expensive litigation.

 

3. What Kinds of Jobs Do You Have?

To pay your employees, you need to know what roles they fill.

You have your own names for their jobs, but state and federal governments might classify them differently. For example, you need to determine whether or not your employees are independent contractors to comply with rules about how different kinds of employees are paid.

Read the law and consult with an attorney to be sure you're classifying your workers correctly.

4. Determining Employees' Wages

Once you have a solid foundation to start from, you need to figure out how much you're paying your employees. Not only do you need to figure out amounts, but you need to determine whether or not your employees are entitled to overtime pay as well.

5. Setting up Payroll the Easy Way: Use Software

You can set up payroll manually, but doing so is difficult, time-consuming, and often leads to human error. Payroll might be new to you, but good software has the expert knowledge to make your job easier.

Reputable brands come with guarantees to protect you from lawsuits, too.

6. Know the Costs Before You Buy

Each payroll software has its price, and you want to make sure you're getting the best deal. One of the best tips for setting up payroll that's forgotten too often is learning about payroll services pricing.

There are a lot of payroll companies out there, and when you're in a rush to pick a service, it's easy to miss details and get ripped off. Taking a moment to learn the costs will save you a lot in the long run.

 

7. Get Your Employees' Information

While payroll software does a lot of work for you, you have to feed it employee data first, including Social Security numbers and information about income tax withholding.

Losing employee information leads to security breaches and legal trouble, so keep this information on file and stay organized.

8. Withholding Taxes

Federal income tax withholding is required by law and the funds are used for government programs. Most payroll software will help you calculate it, but the process all starts with the IRS W-4 form, which every employee must fill out.

Some states require you to withhold additional tax, so look into the laws and be sure your payroll software accommodates state regulations.

9. Determine a Pay Schedule

Once you have all the logistics figured out, it's time to decide when you pay. Some states mandate you pay workers at least twice a month, but many state laws allow you to pay every month or at other intervals.

Each schedule has its pros and cons, the most notable being that the more paychecks you give each month, the more you're spending on printing. In this turbulent time, however, businesses have high employee turnover rates and a more frequent pay schedule accommodates that.

10. Don't Fall Behind

If you follow every tip on this list, you'll know how to set up payroll the right way ... for a while. Every so often, the rules change, so it's beyond important that you keep updated on the latest payroll laws and regulations.

There are other schedules to follow too, like the quarterly IRS tax payment schedule and your own payroll plans. Make sure that you don't fall behind on these, either, or you could be in big trouble with the government and your employees.

Take Charge of Business

Now that you checked setting up payroll off your list, it's time to tackle everything else. No matter how far along your company is, it's never too late to learn and improve.

It's a challenging time to be a business owner, so we have a wide variety of business articles to help you grab the bull by the horns. Get to reading and you'll find yourself on the path to success in no time at all.