From ordering the best payroll check paper to choosing the most user-friendly payroll software, setting up payroll for a small business is not always a small task. Stock Checks offers payroll check stock and compatible envelopes, but there are several other preliminary steps to properly set up your payroll process. Regardless if you have 1 or 40 employees, having your payroll running efficiently will keep your employees happy and your business running smoothly. Here are the steps to set up payroll for your small business.
Research Through Reliable Resources
Before getting started with payroll for your small business, do a little research on government expectations and regulation. Refer to trusted resources such as the US Department of Labor. Their website has information on almost every aspect of payroll for small businesses. Additionally, your state has its own Department of Labor website with state-specific information. Some information may seem to be contradictory, but generally benefits employers. If you are ever unsure about a specific requirement or law, refer to a lawyer or accountant. It is better to be safe than sorry when it comes to payroll and corporate taxes.
Apply For a FEIN #
As a sole proprietorship, you are able to use your social security number for financial accounts and tax purposes. However, when it comes to payroll and employees, a Federal Employee Identification Number (FEIN) is required. You will need this number to open a business credit line or bank account, and for any business financial forms. Most accountants will recommend applying for a FEIN as soon as you start a business, even if it is a sole proprietorship. The good news is that applying for a FEIN is quick and easy. Apply for your FEIN at the IRS website today.
Set a Payroll Schedule
A payroll schedule is how often payroll will be processed and dispersed. The most common pay schedules are weekly and biweekly. Some companies run payroll 2 times per month or on a semi-monthly schedule, but you can choose what works best for your company. When you are determining a payroll schedule, consider the following factors:
- Cash Flow
- Minimum Legal Frequencies
- Number of Employees
- Employee Needs/Requests
- State Payroll Laws
- Federal Payroll Laws
Create an Employee Handbook
With federal and state laws in mind, draft a handbook that outlines the operations and expectations you and your employees are to follow. Inside of the handbook, list items such as your payroll schedule, paycheck and possible direct deposit options, vacation time, and personal days. There are many online resources to help you create this document, and as always, when in doubt refer to an accounting or legal professional. Even if you are confident, it is always a good idea to have a professional review all documents that will be given to employees.
Choose a Payroll Provider
As a small business, you have 2 main choices for processing and administering payroll: handle payroll in-house, or outsource. Each option has its pros and cons, but there is no wrong option. Choose the payroll process that you are most comfortable with. Whichever option you choose, make sure that you as the owner are involved in the process to avoid errors.
In-House Payroll: Handling your payroll in-house gives you more flexibility because you set the schedule and you can avoid additional charges for rushed payroll when you fall behind. However, you will have to set aside the time to process the information and purchase the payroll software and payroll check paper.
Outsourced Payroll: Payroll service providers are great because they will handle most of the process for you, from applying for a tax account number to reminding you when it is time to run payroll.
Purchase Equipment and Supplies
Whether you decide to process payroll in-house or outsource, you will likely need to invest in some equipment and supplies. Most businesses purchase a time clock for employees to punch in and out, easily tracking the time they work. If your employees are paid hourly, a time clock is highly recommended.
For in-house payroll processing, you will need to purchase the following payroll equipment and supplies:
- a payroll processing software such as Intuit
- check printing equipment
- blank payroll check stock
- double window envelopes
Secure Employee Forms
Once you have your payroll process set up and you purchased any required supplies like payroll check stock, have your employee complete the appropriate paperwork. On or prior to your employees first day of work, they need to complete a W-4 form and I-9 form with copies of required identifying documents.
Setting up payroll for your business will not likely to be a 1-day task, but with a little help from the Department of Labor and a payroll professional, it does not have to be difficult or frustrating. Additionally, at Stock Checks we can fulfill all of your supply needs from payroll check paper to double window envelopes. Follow this guide and you will have your first employees on your small business’ payroll in no time.
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