It is essential for your business to process payroll according to state and federal regulations
. There is no room for error when it comes to this side of your company. The United States Department of Labor and Internal Revenue Service are serious about enforcing federal payroll tax laws. Along with this, your state's department of revenue or tax office is sure to feel the same way.
To ensure that you don't miss out on any key details, become familiar with the following four procedures. Timekeeping
Each and every employer has a timekeeping system with the purpose of monitoring the hours worked (for hourly employees) of each employee. While there is no mandatory system, the United States Department of Labor requires that this information be 100 percent accurate and complete.
When processing payroll, you will be required to compute the time worked to ensure that employees are paid the proper amount. Payroll Processing
The payroll processing procedure that one company follows may not be the same as the next. This is based largely on the number of employees in the company as well as the understanding of those in charge of this task.
While processing payroll in house is doable, it can be time consuming and extremely stressful. For this reason, more and more companies are turning to online providers that handle the calculating, filing and payments involved with all local, state and federal payroll taxes. What are Payroll Taxes?
If you have to ask this question it is time to hire somebody to handle this side of your business. In short, employers are required to withhold federal, state, and local income tax as well as Social Security and Medicare taxes.
Additionally, the employer is required to pay its share of Social Security, Medicare, and unemployment tax.
On the state and local level, employers are responsible for withholding income tax (if applicable). Keeping all Taxing Authorities in the Loop
Every year, the IRS sends employers a tax guide that helps them comply with current payroll regulations. For those processing their own payroll, this is something to review with a fine toothcomb.
Processing payroll on a regular basis is important, but you must make sure you also report all tax liabilities (federal income tax, Social Security, and Medicare) to the IRS quarterly (using Form 941) or annually (using Form 944). Federal unemployment tax is also reported annually (Form 940.)
While it is essential to stay current with the IRS, you must also do the same with state and local authorities.
This overview should give you a better understanding of the payroll procedure and what it entails. At this point, you may have one question on your mind: can I process payroll in house or is it best to enlist the services of a third party provider?