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