Whether your business is big or small, every member of your staff must be paid – there is no question. In order to make sure that your payroll runs without a hitch each month, there are necessary steps that must be taken, especially if you are new to owning your own business. Let’s take a look at those key steps.
First of all, you must obtain what is referred to as an ‘EIN’, or Employer Identification Number. This is sort of like a Social Security number, only for your business. It’s used to report vital information to the IRS, and your employees must also use it at tax filing time. Check with the IRS to be certain of what steps you’ll need to take to obtain your EIN, and also, check with your state or local government to see if you also need a state ID number for tax purposes as well.
Once you’ve obtained your EIN, you’ll need to ensure that all employees fill out and return to you the proper tax documents required by the IRS. Form W-4 is your withholding form, which determines the amount of federal taxes to be withheld from each paycheck.
Choosing a payroll system is also a very important decision. There are large and small companies, some operate at only a local level, others are national. Another option that is becoming increasingly popular is to implement a payroll software system that allows the business owner to handle payroll in-house. However, be aware that if you choose this option, you’ll want to stay educated and on top of things. As the business owner, you are responsible for reporting all payroll taxes and making sure they are paid.
However you decide to set up your payroll system, be sure to do your research and never rush into anything by way of impulsive decision making. There are plenty of resources available both online and in hard-copy, as well as a huge number of experienced professionals who can give you tips for getting your business venture and it’s payroll system up and running!