Just as important as setting things up right is setting up a payroll process that keeps you on top of deadlines, filings, and requirements on a continuous basis. As noted previously, small business owners are always pressed for time. Subsequently, it’s easy to put payroll on the backburner as you focus on other areas of your business. If you don’t prioritize payroll, you will trigger an avalanche of problems, not least of which is that employees and the department of labor will not react well to missed pay days. Also, if you don’t pay your taxes on time, you could be subject to penalties on the federal, state, and local levels.
Although it’s always an option to do your own payroll, there is more to this than meets the eye. Are you up to the task of collecting all the necessary information from your employees? Are you okay with the idea that it will take several hours each pay period to organize your payroll and issue paychecks? Are you familiar with the many taxes you’re required to pay and withhold?
Whether it’s hiring your first employee, or adding to your team, bringing a new hire onboard is a big step. As a small business, each new employee is not only a testament to the success and potential of your business, but a significant investment of time and financial resources.
There are important considerations to think through before you even get to the recruiting and interviewing stages, not the least of which is determining which employee classification type the role will be: exempt or non-exempt. From a payroll perspective, you’ll need to understand both types of employee classifications. let’s examine some of the characteristics of each
Proper setup can be the difference between payroll success and failure. For this reason, it’s imperative that you know exactly what’s required of you, from a compliance perspective. However, with so many regulations and nuances to understand and keep track of, it’s easy to make a mistake. For example, you might forget to register your business for federal, state, and/or local tax withholdings. Or, it’s possible that you misclassify employees, which is a red flag for the IRS or the department of labor.
familiarize yourself with all the rules, regulations, and laws associated with payroll. Also, don’t forget to stay current with any changes that could impact your company and/or your employees.