Employee records are a crucial aspect of running a successful business. Financial documents are one such set of documents you’ll need to create and track. So, it comes as no surprise that you should learn how to set up payroll.
Doing payroll in-house gives your business control over its documents. It ensures all paperwork is accounted for, saves money, and other benefits we’ll get into.
What does the process involve when setting up payroll? What are the benefits? And, what resources can you use to make it go as smooth? Let’s find out!
How to Set Up Payroll (Step by Step)
Payroll is the documentation detailing who gets paid what in your business. The documents also outline what you’d submit as part of business taxes. To put it bluntly: You need to provide them for both employees and Uncle Sam.
Get Registered and Compliant
You will begin the payroll set up by applying for an Employer Identification Number (EIN). Applications are available by mail, online, faxed in, or over-the-phone. You will use the EIN when submitting information and tax payments.
You will also need to:
- Register with your state’s labor department
- Print and display employment compliance materials
- Review any state labor laws to which you’ll comply
You should review other items including your state’s new hire registration system. Worker’s compensation, unemployment tax, and employment eligibility are other items you’ll need to review before setting up payroll and doing hires.
Confused? You could lean on your attorney or business pros to handle this. They can provide the necessary paperwork and filings for a fee. Otherwise, stick to official government resources for your needs.
Schedules, Payments, and Systems
Now it’s time to get into the finer details of having employees. This is, of course, if you completed the federal and state requirements. Get any paperwork out of the way, first, and then follow up with these three items:
- Schedules — When employees get paid (eg. biweekly)
- Payments — How employees get paid (eg. direct deposit)
- Systems — What software/platforms you’ll use (eg. Quickbooks)
A super-simple way to get started is the traditional paper trail. Payments could go out bi-weekly, via check, and recorded with pay stubs and software logging. You can click here to learn more about Paystub creator for this method.
Another great option is using online accounting systems. These tend to handle most, if not all, aspects of payroll. You could train someone in-house to handle it or outsource the task to a tax professional.
Some of the Other Important Tasks
There’s still lots to process when handling payroll in-house. A lot of this is the employee paperwork like W-4’s for taxes and I-9 for eligibility to work.
Include these as part of your payroll to-do:
- Creating a payroll register
- Creating an employee handbook
- Setting up insurances
You have a lot of work cut out for you, no doubt, but stay diligent. It’s vital you follow labor laws when hiring and handling payroll.
Payroll is a Piece of the Puzzle
Learning how to set up payroll is just one of many things you’ll do as a new business owner. There are many other things you’ll learn along the way. From its operations to exit strategies, successful business owners are lifelong learners.
Do you want to improve your business knowledge and success? If so, check out other business guides on our site. There are tons of resources that will make you a better, more successful business owner. Good luck!
