A Business Owners Guide to Setting up Payroll and Managing It like a Pro

A Business Owners Guide to Setting up Payroll and Managing It like a Pro Most businesses owners hate dealing with their payroll, but it doesnt have to be a pain! Heres a guide to setting up payroll and managing it like a pro. One of the most difficult things about being a small business owner is managing your finances. This is especially true if you have employees working with you at your company. But, setting up a payroll doesnt have to be the nightmare people often perceive it to be. Not sure where to start? Dont worry, weve got you covered. Lets take a look at how you can go about setting up payroll as easily as possible. 1. Obtain Employee Records Before you begin, youll have to acquire payroll documents from your workers. There is a handful that you need to collect, so lets briefly go over them: The State W-4 Serves as a state tax withholding document. The name could vary depending on which state your company is based in. The Federal W-4 Declares what tax rate you need to use for that specific employee. The New Hire Form As the name suggests, youll need to have this on hand so you make sure you report any new hires to the state. The I-9 Form Declares the workers eligibility to seek employment in the United States. Once youve collected all the necessary forms, youll be ready to 2. Calculate Their Total Work Hours This step is fairly straightforward. The only additional factors to consider are salary and overtime. For regular hourly employees, you simply add up the hours on their time sheets to get the total of hours worked. If these hours add up to 40 in one week, youll need to make note of this for calculating overtime pay. Employees are who salaried generally do not need to have their hours tracked. After youve added up your employees hours, you can see how much they made. 3. Calculate Gross Pay For each week, add up the hours your employees worked and multiply that number by their base pay. Any hours over 40 are multiplied by 1.5 times the base pay for overtime. For example, lets say that you have a worker who you pay $10/hour. He worked 50 hours during a busy week. So, youd calculate 40 x 10 (base pay rate) = $400. But, then calculate 10 x 15 (overtime hours at overtime pay rate) = $150. Thus, he would have earned $550 for that week. If math isnt your thing, dont worry. There are plenty of ways to calculate these numbers automatically. 4. Calculate Deductions This is the section every employee loves. Before you can give your workers their checks, youll need to take money out for things like state tax, federal tax, social security, and benefits you may offer. But, the process for calculating this is straightforward. You simply add up the cost of each deduction for each employee and then subtract that amount from each employees check total. 5. Calculate Net Pay Finally, youll have the amount youre supposed to pay your employees. How you actually pay your employees is up to you, however, whether you choose to write checks manually or utilize direct deposit. As long as youre paying your employees the appropriate amount, there shouldnt be any issues. If youre looking to automate this process too, software like the California Pay Stub Generator can help make your life easier. Setting Up Payroll Can Seem Difficult But it doesnt have to be. With the tips above, youre sure to get through the srtting up payroll process smoothly and efficiently. Want to learn other tips on how to make your business more productive? This article has plenty of useful information.