A Guide To Payroll Basics For New Businesses
Estimates suggest that at least 43% of businesses have at least one employee.
If your business is about to bring on its first employee, you’ll need to learn about payroll. Ignore it, and you may end up making a mistake that gets you into trouble with the local authorities.
What Is Payroll?
In simple terms, payroll is essentially the money a business pays out to its employees.
While payroll includes the salary you pay employees, it also consists of the taxes that employees need to pay. This generally includes PAYE taxes, such as income tax, but it can also include taxes associated with social security.
This tax side of things is generally what makes it challenging to conduct payroll. That’s because the onus is on the employer to make the correct tax payments for employees.
Gathering Important Information
When sorting out payroll, you’ll need to first gather some important bits of information. Without this information, you’ll find it difficult to conduct payroll in a manner that’ll please the authorities.
At the most basic level, you’ll need all employees to fill out something known as a W-4 form. This form allows you to collect vital details about an employee. You can then use this information to calculate and pay employee tax burdens.
It’s also vital you keep track of how much work a particular employee is supposed to do.
So, if someone is a full-time employee, it means that they might work 40 hours per week. You can then use this figure to figure out the wage of an employee when creating their paystubs.
Should You Do It Yourself or Should You Outsource?
As you might’ve guessed, taking care of payroll can be complicated as there are lots of little details you need to account for.
That said, you may doubt your ability to manage payroll, even if you do have access to the correct tools. If that’s the case, you may want to think about hiring a payroll management company.
Doing so can be expensive, but it’s often money well spent. After all, with their help, you can avoid the kinds of mistakes that’ll land you in hot water.
Do You Understand Payroll Basics?
With the help of this post, you should understand payroll basics and why this concept is important to a business.
It can be difficult to understand how payroll works, and so you may need to do a bit more reading. This might create a bit of a delay in terms of how quickly you can bring on your first employee, but it’s important you don’t let this frustrate you.
That’s because payroll is something you can’t get away from. After all, if you want your business to grow, and take on employees, you have no choice but to master the concepts associated with payroll.