As an employer, it is your responsibility to understand payroll basics. This important because it is your responsibility as the employer to make sure that everything is executed properly. You can outsource these services (go now) or you can do it in-house. There are a number of professional employer organization (PEO) companies that could help you outsource and handle the payroll part such as salary, benefit, and even taxes of the business. Collaborating with PEO companies means you can streamline these processes across currencies, time zones, and languages. PEO companies like Peak PEO (find out more here) could also help your company with recruitment and HR services like social charges, employee contracts and so on besides assisting with the payroll services. In this article, we will go over the payroll basics you need to know to execute your role as an employer properly.
The first step to successful payroll is ensuring that you have all of the correct employee forms completed and on file. If this task seems too tedious, menial, or arduous to you, you always have Fort Collins payroll services you could count on. The first form you will need is a W-4. This form sets out the amount of federal income taxes your employee wants to withhold from their income. Each state also has their own version of the W-4. In Arizona, it is known as the A-4. This form puts out the amount of state income tax your employee wants to be withheld from their income.
The last form is not a tax form but is vital that you have each employee complete one. This form is the I-9 or the Employment Eligibility Verification Form. It is proof that the employee has the right to work in the US, whether they are a citizen or not. They will also have to submit several forms of identification along with this form.
Once you have all the payroll forms gathered, you will need to determine the payment schedule for your employees. You will need to determine your pay periods, or how often your employees get paid. Typically, this is weekly, bi-weekly, or semi-monthly. Then you will need to determine payday, or when your employees get paid for the pay period. Additionally, you will be responsible for keeping a record of all employee hours. Whether that is through manual forms that they submit to you or an electronic timekeeping software to organize it for you.
Employment and Labor Laws
You also need to ensure that you are following federal, state, and local employment and labor laws. This would include following federal and state minimum wage requirements, overtime requirements, and paid time off requirements. You can find the federal requirement by reading the Fair Labor Standards Act. For state and local laws, you will need to check their employment websites for their regulations and requirements. HMRC approved umbrella companies can save you creating your own limited company, hiring an accountant, or dealing with HMRC.
Collecting, Paying and Filing Taxes
As the employer you are responsible for collecting, paying, and filing for all payroll taxes. This includes federal taxes like federal income tax, social security tax, Medicare tax, and unemployment tax. As well as state and local payroll obligations. As an employer, you are responsible for matching social security, Medicare, and unemployment tax payments.
Federal and state income taxes need to be paid at least monthly. FUTA tax (Federal Unemployment Tax Act) should be paid quarterly. Payroll tax returns also need to be filed in a timely manner. Form 941 should be filed quarterly, and Form 940 should be filed annually. At the end of the year, you also need to file Form W-2s or 1099s for any employees or contractors you paid and provide them with a copy as well.
Setting Up Your Payroll
Now that you understand payroll basics, now it is time to set up your payroll. You can do it on your own or you can utilize a payroll company to take care of the process for you. You will just have to find a solution that works best for your company and situation.
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