Have you seen the IRS forms for correcting employment taxes before?
With constant changes in tax law, it can feel impossible to keep up with small business payroll. If you’ve had a reason to look at Form 941 or 943, you understand the challenge at hand. For those who haven’t gone through this process, it’s worth avoiding at all costs.
The good news is that adopting some easy payroll best practices can go a long way.
Whether you’re completing this essential function for the first time or the hundredth, you can find something valuable below. Continue reading to find time-tested payroll tips to make your payroll easy and worry-free in the future.
Install a Payroll Software
Most starter-level accounting software packages include basic payroll for small businesses. While this can help at first, it can also become more trouble than it’s worth.
Planning for growth is Business 101, and nothing could be more crucial to that effort than payroll. Look beyond the standard paystubs on your current software and consider some third-party options.
Ensure You Have the Right Paperwork
This essential function of hiring employees needs to be 100% complaint to keep your payroll out of trouble. Failure to have the following for each employee can put your business at risk during an IRS audit:
- State ID
- Employment Eligibility Verification (Form I-9)
- Employee’s Withholding Certificate (Form W-4)
If you’re only getting started or work with contractors, you’ll prepare a Form 1099-MISC each year. Failure to classify the right way can lead to catastrophic errors in your payroll.
Classify Your Workers
In some cases, paying an employee under the wrong classification can break the law.
This kind of error often happens by treating people who should be employees like independent contractors. Federal and state laws insist that a worker who performs the same services as your business should be an employee. Paying these individuals on 1099 can get you into how water fast.
Know Your Laws and Regulations
Every state and local municipality in the United States has laws and regulations you need to understand. Most provide resources and guides, but if you have concerns, do not hesitate to contact a CPA or lawyer.
Find Qualified Help
Too many businesses go too long with a de facto HR manager. Hiring payroll specialists may hurt at first, but it can also keep your dream alive.
More About Small Business Payroll
Do you have even more questions after reading this article about small business payroll? Continuing to educate yourself and seek professional advice from the start can get you where you want to go. Whether you have plans to conquer the world or a local niche, you have to pay your employees correctly.
Do you need more accounting tips for small businesses? We’ve got you covered. Don’t leave before you check out more of our content that can add value to any organization!