Payroll is one of the most important components of running a business. It can also be one of the biggest expenses. So what is payroll exactly? In a nutshell, the term refers to the total amount of wages that a company pays its employees. But running payroll involves complex calculations of the employees\u2019 earnings and tax deductions. If this sounds complicated, that\u2019s because it is. <\/p>\n\n\n\n
Luckily, we\u2019re here to help you make sense of it all so that you can decide whether you want to take on these tasks yourself or leave them to the professionals.<\/p>\n\n\n\n
Understanding payroll is essential to understanding the financial details of your business and remaining compliant with state and federal laws. In addition to calculating how much your employees need to be paid, payroll also refers to: <\/p>\n\n\n\n
Small business payroll processing starts the moment a company hires a new employee and ends with the conclusion of the employment period. During that time, the US payroll law obliges employers to ensure that employee payrolls don\u2019t have any errors and are completed on time. <\/p>\n\n\n\n
For many business owners, doing payroll on their own is stressful and time-consuming, especially because they need to focus on other tasks. Using free payroll software<\/a> products can simplify a company’s payroll processing. However, these provide businesses with only the basic payroll features. Companies that have their own payroll sector sometimes use a combination of payroll and accounting software products<\/a> to ensure accuracy when calculating tax deductions and conducting payroll preparation.<\/p>\n\n\n\n Regardless of whether you\u2019re planning to do your own payroll processing or hire someone else to do it for you, there are a few basics that you need to be familiar with. <\/p>\n\n\n\n Before initiating payroll procedures, you need to decide how to pay employees for their work. There are two options. You can either pay annual salaries or hourly wages. Regardless of which option you choose, the total amount is referred to as gross pay, which is what an employee makes pre-tax and before subtracting deductions. <\/p>\n\n\n\n Each employee needs to complete Form W-4, which includes their personal details and information about their federal income tax withholding. If employees change their marital status or have kids, the appropriate changes need to be made to the payroll, meaning that you should review the withholdings of each employee every year. <\/p>\n\n\n\n Another important thing to decide is how you make payments. You may use paper checks or direct deposits, but it\u2019s crucial to establish a regular schedule. It can be weekly or monthly, depending on each employee\u2019s payroll status. <\/p>\n\n\n\nWhat is the payroll process?<\/strong><\/h2>\n\n\n\n
Collect information from your employees<\/strong><\/h3>\n\n\n\n
Establish payment method and paydays<\/strong><\/h3>\n\n\n\n
Calculate employee time and overtime<\/strong><\/h3>\n\n\n\n