Having a proper handle on your payroll is essential. You don’t want to be overpaying your employees or contractors, and you certainly want to ensure you are staying compliant with the IRS when it comes to payroll taxes. So here are some helpful payroll tips for small business owners that you can apply to your enterprise:
— Consider outsourcing your payroll.
Shy away from doing your own payroll. First and foremost, unless you have an accounting background, you probably don’t know all the rules involved. So let an expert take these payroll requirements off your plate and ensure you are playing by all federal, state, and local rules. There are hefty penalties for filing your payroll tax returns late or not providing adequate withholding deposits when they are due. Avoid these traps and stay current by letting an expert handle it on your behalf.
— Obtain an EIN and give it to your payroll processor.
You must have an Employer Identification Number (EIN)for payroll purposes. If you operate a corporation or partnership, you should already have an EIN. If not, you must obtain one from the IRS to use for payroll processing and payroll taxes.
— Classify your employees/contractors correctly.
Do you have 1099 independent contractors working for you? Do you have W-2 employees on staff whom you pay benefits like health insurance? Make sure you classify all workers on your team correctly when doing your payroll and covering your payroll taxes. These work statuses can have a notable effect on payroll processes.
— Consider offering fringe benefits to reduce your taxes.
Giving a raise to a deserving employee is nice. However, it automatically increases your payroll and payroll tax bill. So why not offer fringe benefits instead? The good thing about fringe benefits is that they are tax-free in many cases. They include dental and vision insurance, a company smartphone, and a retirement plan.
— Maintain an up-to-date profit and loss (P&L) statement.
A profit and loss statement helps small business owners maintain a good handle on their monthly budgets in terms of how much money is coming into the business and how much is going out. This information is valuable when determining your payroll taxes, and it can help you find ways to reduce certain business expenses as well.
— Consider maintaining a second business bank account for payroll.
In order to set aside money to cover your payroll and payroll taxes, it’s a wise idea to have a second business bank account specifically for this purpose. This will guarantee that you have enough funds on hand separate from your regular business funds to cover these required payments.
— Make federal tax deposits for payroll taxes each time you issue payroll.
By doing this, you can ensure that the money you put toward covering payroll taxes is applied correctly. There are large IRS penalties for failing to pay your payroll taxes on time, but there’s no rule about how often you can make these payments. So why not always be caught up on them?
1-800Accountant Payroll Services
1-800Accountant can offer more payroll tips for small business owners, along with actual payroll services. Learn more by calling 1-800-222-6868 or by visiting www.1-800Accountant.