Understanding these steps when starting the payment process for your small business is essential!
The thought of Payroll and Human Resources can send a small business owner’s minds reeling. If you do not have experience in either area, you can find yourself unprepared to handle the cost of using a payroll service provider.
A few things you can begin to consider before implementing payroll:
Research: Make sure you are clear on your state’s requirements for retail and sales tax. If you are selling a product or providing a taxable service then you need to make sure you meet the requirements for the state or states you are doing business in.The EIN: You have a business. Whether you have a for profit or non-profit you must have this number. This seems obvious, but you want to make sure you have this information.
Number of Employees: How many employees will be working for you? Are they part-time? Most importantly, how are you currently paying them? Are they paid weekly, bi-weekly, or monthly? Are they employees or contractors?
These are important questions and need to be considered. Employees and contractors can both be paid out of payroll, but you need to be clear on which employees will have taxes deducted and which will be exempt. This information, when provided upfront, can assist your sales rep with creating a more accurate proposal.
If you pay your employees weekly, keep in mind that you will likely pay more for this service. Bi-weekly pay ensures an employee will be paid 26 weeks out of the year. Semi-monthly is 24 pay periods a year and is usually the standard 1st and 15th pay structure.
If an employee is considered part-time and is working more than 30 hours, just be aware of the Affordable Care Act. All these are factors that need to be considered.
Payroll Processing Companies: There are several payroll processing companies. Some are large and some are small and local. Either way, you should meet with at least three different companies. Don't let the size of the company intimidate you as it does not necessarily mean that they don’t want your business. They are very departmentalized and usually have a department that works primarily with small businesses.
Make sure you are clear of the services you need. Do you need payroll processing only? Do you want to speak to someone about outsourcing benefits? Will you have someone manually entering the information at your location? Do you want live checks or will you require direct deposit? An added cost of issuing live checks will be a decision that you need to make while keeping your employee base in mind. Direct deposit is a more efficient and inexpensive way, but make sure your employee staff actually will be able to open a bank account. Many payroll processing companies offer a wide variety of services that can be beneficial for small business. Know your budget and how much you plan to do yourself.
Small business owners are fearless and overcome many obstacles. Don’t let your payroll intimidate you in to putting off the decision.