Setting Up a Payroll System
Having a payroll system in place will help your business run more efficiently. It will allow you to streamline your legal and financial responsibilities to both your employees and the government, so that you can focus your attention elsewhere. When it comes to managing payroll, you basically have two options: manage it in-house, or pay an accountant or bookkeeper to do it for you.
CPA To Properly Set Up Your Payroll System
The first thing you must do is obtain the proper identification. Before hiring employees you must apply for an EIN from the IRS. This is basically the Social Security Number of your business, and is necessary when reporting information to the IRS and state governments. Check state and local laws as well; since many of these governments require businesses to have ID’s to process state and local taxes.
With all the necessary identifications, your next step is to establish pay periods and terms of employee compensation. You may have a preferred pay period, but know that some states have laws determining when to pay employees. Once you’ve determined how often to pay, you must decide on the terms. Will you offer paid vacation? Overtime? How will you track employee hours? What about healthcare premiums and retirement plans which will need to be deducted from checks and paid to the right organizations? All of these questions need to be answered and documented for your business.
Now you can begin hiring employees.
All employees must fill out a Federal Income Tax Withholding Form (or W-4) when they begin so you know how much federal income tax to withhold from their pay. You must have a W-4 on file for all active employees, and for three years after an employee has left the company. There are also several other forms that need to be kept on file. Payroll tax reports must be submitted on either a quarterly or an annual basis.
There is a lot of information, and a lot to keep track of, and while there are some business owners who are able to manage everything themselves, many others find it is simply easier and more convenient to hire a professional accountant for such payroll services.
Serving businesses in Miami, Fort Lauderdale and Pembroke Pines, call our office at 954-239-8365 or fill out our contact form to learn more about our business payroll services.