Payroll For Small Business – Here’s What You Need To Know

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Small Business Payroll

This post contains a collection of articles I have selected to give you an overview of dealing with small business payroll. Before you get to the resource section, let’s go over a few key issues and considerations.

Depending on your business’s size, keeping up with payroll can turn into a full-time job. Payroll processing must be accurate for your employee’s paychecks and tax filings.

In the payroll department, there is no room for errors or delays. Your payroll processing and administration might be performed weekly, bi-weekly, or even monthly, depending on how you pay your employees and schedule your tax payments.

A larger workforce will require daily maintenance because of adjustments such as an employee that had an issue with a punch clock, managing holiday pay, vacation pay, etc.

Another issue you need to focus on is being current with the law and tax codes. You don’t want to process your payroll using outdated regulations.

Payroll Tax Calculation Example

Payroll taxes use a percentage from both the employee and employer. The payroll manager will deduct the employee’s amount and pay the revenue service on their behalf.

Let’s look at an example:

The FICA tax (Federal Insurance Contributions Act” is mandatory and used for programs such as; Social Security, Disability Insurance, Old Age Pensions, Medicare, etc.

50% of the FICA tax is paid by the employer and 50% by the employee.

If the current FICA tax is 12.4%, the employee and employer each pay 6.2% of the employee’s gross pay.

The medicare tax is a total of 2.9% of the wage.

For example, the employee’s gross wage is $1,000 per week. The employee’s pay is deducted by $14.50, and the employer pays $14.50 for a total tax of $29, equaling 2.9% of the employee’s wages.

Total tax collected for a $1,000 wage example:

$124 FICA: $1,000 x 12.4% = $124 – Total $62 Employee, $62 Employer

$ 29 Medicare: $1,000 x 2.9% = $29 – Total $14.50 Employee $14.50 Employer

$153 Total Tax collected: $1,000 x 15.3% = $153

The above is just an example of how one payroll tax is calculated. For more details see, the articles I have included in the “How Payroll Taxes Are Calculated” section in the resources below.

When Are Payroll Taxes Due?

Depending on your country’s laws and how you pay your employees will determine when payroll taxes are due.

You may need to submit your payroll taxes weekly, bi-weekly, semi-monthly, or monthly.

I recommend you don’t fall behind on Payroll taxes. Once you fall behind, it won’t be easy to get caught up. Use your line of credit or other methods to make sure payroll taxes are submitted on time.

Look at it this way; it’s not my money!

I’m collecting the taxes from my employee’s wages, paying my part, and submitting it to the government.

When you focus on the mindset that it’s not your money, you will avoid using the funds for other expenses.

For more, see the resources below in the “When Payroll Taxes Are Due” section.

Outsourcing:

If your payroll gets too big for you to handle or you just don’t want to deal with it, you can hire someone full-time or outsource to a company specializing in payroll processing.

See also
How To Manage Cash Flow for Your Small Business

Whether you process your payroll in-house or you outsource it, you’ll want to keep an eye on the numbers. Wages are a significant expense in any business, and you want to keep them under observation.

The Pros and Cons of Outsourcing Payroll

Naturally, there are pros and cons to outsourcing your payroll.

When you have a competent company handling your payroll, some of the pros include:

  • You instantly gain experienced and knowledgeable people performing this task for you.
  • Your cost may be lower than hiring staff and setting up a payroll department.
  • You’ll be assured your payroll is accurate and completed by a professional.
  • You’ll be update date with all the current laws.
  • You can count on your payroll, and taxes are all up to date.

Some of the cons may include:

  • Loss of control because you are outsourcing a delicate task.
  • Security and data breaches are a risk, especially for companies that don’t have measures in place for security, privacy, and a data breach.

More pros and cons in the resource section below, plus see the section for companies that can handle your payroll for you.

Payroll Resources:

Below You’ll find an abundant amount of expert tips. Each section contains hand-picked articles and resources I selected from popular websites, which will be great resources to keep on hand.

Resource sections include; Payroll Definition, Who Pays Payroll Taxes, When Payroll Taxes Are Due, Payroll vs. Income Tax, and more. Below You’ll find an abundant amount of expert tips. Each section contains hand-picked resources chosen from popular websites I think will be great resources to keep on hand.

Payroll Definition

Payroll Definition And The Importance | Paycor

What is Payroll? – HR Payroll Systems

Types of Payroll Taxes

The IRS Collects 3 Types of Payroll Taxes | Future Systems

Payroll Taxes – Encyclopedia – Business Terms | Inc.com

Who Pays Payroll Taxes

What Are Payroll Taxes and Who Pays Them? | Tax Foundation

Understanding Payroll Taxes and Who Pays Them – SmartAsset

When Payroll Taxes Are Due

Employment Tax Due Dates | Internal Revenue Service

How and When to Make Payroll Tax Deposits

Payroll vs Income Tax

Payroll Taxes vs Income Taxes: Everything You Need to Know

How Are Payroll Taxes Different From Personal Income Taxes?

How Payroll Taxes Are Calculated

Payroll Tax: What It Is, How to Calculate It | Bench Accounting

How to Calculate Payroll Taxes: Step-by-Step Instructions | OnPay

Payroll Tax Calculator

Salary, Payroll, Tax and 401k Calculators | ADP

Employer Payroll Tax Calculator | Gusto

How To Setup A Payroll System

10 Steps to Setting Up a Payroll System | Tory Burch Foundation

Setting Up a Payroll System, Payroll Systems | QuickBooks

How to Set Up Payroll for Your Small Business in 9 Steps

Payroll Tips For Small Business

25 Employee Payroll Tips for Small Business Owners – Replicon

How to Manage Payroll—Payroll Tips for Small Businesses | FreshBooks

Payroll Software

Payroll Software for Small Business | Patriot Software

10 Best Payroll Software Solutions for Small Businesses

The Pros and Cons of Outsourcing Payroll

Payroll Outsourcing: The Pros and Cons

The Pros & Cons of Outsourced Payroll

See also
Dealing With Uncertainty in Business

Payroll Companies

10 Best Payroll Services for Small Businesses | The Blueprint

Payroll Services for Small Businesses & Companies | Paychex

The 52 Best Payroll Services for Small Business Owners

Glossary

Payroll Tax Definition | Payroll Glossary | Payroll Terms

Courses Related to Payroll

Courses on Lynda.com Related to Payroll

Courses on Udemy.com Related to Payroll

Books Related to Payroll

Books from Amazon

Google Book Search

The Latest about Payroll

In this section, you’ll be able to stay up to date on the latest related to payroll including videos, news, the latest Google search results, what people are tweeting, and more.

Google Searches

Latest Searches Related to Payroll

Latest Scholar Searches Related to Payroll

Latest Image Searches Related to Payroll

News

Latest News Related to Payroll

Twitter

Tweets Related to Payroll

YouTube

Videos Related to Payroll

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