Launching a new business? Companies of all sizes and scopes depend on payroll to pay their employees and comply with federal and state regulations. You can’t ignore payroll even if you have a single employee.
But how do you go about planning the payroll for your business when you’re starting out? What’s involved? Read on to find out what’s payroll and how you can do it for your small business.
In simple terms, payroll refers to all the steps a company has to take in order to pay employees. Since no two companies are the same, payroll varies greatly depending on the size and the nature of every business.
Payroll involves several processes, including paycheck calculation and distribution, financial records, and payroll taxes. Payroll has to account for the salary or hourly payment of each employee across a company.
Moreover, payroll has to include overtime pay, as well as deductions, withholdings, bonuses, sick time, holidays, and every other element of a paycheck.
In-House Payroll Processing
Some companies opt to do payroll internally. While it’s a complex process, it’s not impossible to learn to do payroll yourself. You will need to learn payroll and tax laws in order to do payroll for small businesses by yourself.
The least expensive but most time-consuming approach is to do payroll manually. To do that, you will have to track employee time and manually calculate how much money should each of them receive. The calculations should also include deductions and also account for your own employment tax remittance.
Using a payroll software can somewhat mitigate the complexity of doing payroll manually. Online payroll applications allow you to process payroll faster and with fewer errors. Moreover, these programs are easier to learn than the numerous calculations you need to do payroll manually.
As your company grows, you might want to consider hiring an accountant just to process payroll. However, this means paying an extra employee just to calculate how much you should pay your employees. Thankfully, there’s a great middle-ground solution out of this expense: outsourcing.
Today, there are numerous full-service payroll providers. These companies take care of all your payroll needs from start to finish for a nominal fee. Local providers like payroll services Australia and numerous US-based companies offer specialized payroll services that take care of the payroll regulatory requirements of each country.
When you outsource payroll, you pay just a few dollars per employee, which is almost always less than you would have paid otherwise, unless you did everything manually yourself. Outsourcing allows you to focus on growing your business instead of spending hours on payroll calculations each week.
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