So, you're looking at your online business. It’s doing pretty well.
After working for a bit with your small team, it hits you that you need to actually take care of the financial side of your business, because that is your lot in life as a small business owner.
But no worries, right? You just need to calculate your employees' hours and send out their paychecks.
Setting up your payroll is not as easy as you might think it is. You'll need to keep an eye on payroll taxes, wage policies, and a million other small tasks that can seem daunting to the uninitiated.
Know nothing about payroll basics?
Here’s a primer that will get you set up in no time.
What Is Payroll Processing?
In the simplest of terms, payroll is the total amount of wages that you'll pay to your employees. It doesn't matter whether they're full-time employees, freelancers or contractors.
Payroll processing encompasses the administration of your employees' financial records from salaries and wages to bonuses, deductions, and net pay.
But, what if you have a single virtual office assistant?
It still counts, and you'll have to establish a solid payroll processing.
Payroll Processing Basics
Payroll processing is known to be one of the most important — and most time-consuming — HR work, as it can be performed on a weekly, biweekly, semi-monthly or even monthly basis.
The most common pay length period is every two weeks, but if you're new to the game, enlisting the help of payroll services would be our recommendation.
Three things are fundamental when processing payroll:
1. Collect Your Taxes
It might sound pretty basic (see what we did here?), but for small business owners, it is essential to be diligent about withholding the right amount out of your employees' paychecks to pay taxes to your government.
Depending on your location and where your business operates, you'll be looking at potential federal, state, and local income taxes.
And make sure you keep an eye on things like social security, and healthcare-related taxes like the U.S.' FICA contributions.
2. File Your Taxes on Time
The natural progression after withholding money from your employees to pay your business' taxes is to go ahead and pay your business taxes.
And on time.
The trick here if you're unfamiliar with which tax payment intervals to go for is to follow our recommendation and get good payroll services.
If you're not in a good place to do so, then you'll have to...
3. Keep an Eye on Tax Laws
Tax laws come in levels, so you should make note of each level and what sort of forms pertains to your business. From federal income tax forms filed on a quarterly basis to unemployment tax forms that follow a yearly schedule.
In addition, don't let employment laws fall by the wayside. You have to make sure you're following employment laws, which include — to mention a few — minimum wage regulations, overtime rules, and the minimum age of your employees.
Don't make the mortal mistake of assuming that these laws are set in stone and that they'll never change. Keep checking the laws for any changes in policies or even amends that might affect your business.
After learning about payroll basics and how to keep your business from financially imploding, you're ready to get to the fun parts of growing your online business.