MANY PEOPLE WHO want to venture into the business industry think payroll processing is an easy thing they can do on their own. This task may sound easy, but wait until you are the one tasked with handling it. It is a challenging task that needs some skills and experience. You need to be very good in calculation to ensure that the wages and taxes are paid accurately. For you to accomplish this, you should know the basics of a payroll.
Paying employee wages is one of the primary basics of payroll that you need to understand. It is obvious that employees need to receive payments for their services. The quickest way to halt a company’s productivity is to fail to pay the employees. As an employer, you need to keep sharp so that you don’t get confused and screw up your employees’ compensation. It is of great significance to keep a record of each employee so that you are sure of the number of hours they work. Poor record keeping can cause you to lose a lot of money or be in conflict with your employees.
Another basic payroll rule is paying your taxes. It is mandatory that employers pay payroll taxes. As an employer, you will have to pay federal and state taxes on your business as well. For you to avoid being audited (or worse), you need to pay these taxes. Know how to calculate these taxes before you submit them; these taxes should also be reflected on the payroll of your employees.
As an employer, you will be required to deduct benefits like pension and health plans. These benefits are meant to help the employee in the future. Like the health benefits, they will prove useful to the employees in the case of an emergency. When an employee or a spouse or children needs immediate medical attention, these benefits will help. The benefits should be deducted from the employee’s paycheck each pay day. Keep in mind, however, that the benefits are voluntary.
It is also good to understand the payroll staff. This should be a trustworthy, efficient and knowledgeable exercise. If you don’t practice precision here, the employees will be inconvenienced by not being paid on time and, thus, be de-motivated to perform well. As a business owner or manager, you would be wise to have some payroll staff skills so that you can pay your employees accurately and in time in the event that something happens to your actual payroll staff person. Many companies hire outside firms to control their payroll service.
Payroll Accounting is another basic rule you should have. It’s always smart to have a good payroll accounting system. This is a system that will ensure that all the paid wages are properly coded into the ledger book. Once this is done, all the kinks in the accounting department will be streamlined. If you are poor in accounting, you can make use of payroll software like Peachtree. Otherwise, it is recommended that as soon as you can afford the incurred cost, hire an outside company to keep track of your payroll services.