A Guide to Small Business Payroll

As your small business grows, you'll likely reach a point where you need to hire help. Once you do, managing payroll becomes a critical task. It’s more than just paying your team; it involves calculating wages, withholding taxes, and ensuring you're compliant with state and federal regulations.

Here's a simple overview of the process:

• Set Up an EIN: You'll need an Employer Identification Number (EIN) from the IRS. This is your business’s unique tax ID, much like a Social Security number.

• Collect Employee Information: For each new hire, you'll need them to fill out a W-4 form. This form tells you how much federal tax to withhold from their paycheck.

• Calculate Pay: This is where you determine gross pay, which is the total amount an employee earns before any deductions. Then, you subtract all the necessary withholdings, like federal, state, and local taxes, as well as Social Security and Medicare. What's left is their net pay.

• Pay Your Team: Whether you use direct deposit, a check, or a payroll service, you need to pay your employees accurately and on time.

• File Taxes: This is the part that can get complicated. You’ll need to remit the withheld taxes to the appropriate government agencies and file regular reports, like Form 941 (Employer's Quarterly Federal Tax Return).

Using a payroll service or working with a bookkeeper can make this process much easier and help you avoid costly mistakes.

As always, if I can be of any help, please reach out to me at; mdaviscpb@qbocleanups.com