How to Do Payroll and Taxes Yourself
Access to a limited workforce makes it hard for small businesses to grow and thrive. If you own a small business, you will be the one to take care of all the tasks from administrative to marketing, which can be challenging. Hiring a team to handle the activities might not be financially sustainable, especially at the beginning stages. For that reason, even if a tax is challenging, you will be required to learn how to do it yourself. One of the challenges tasks associated with running a business is the preparation of payroll and taxes. If you decide to do payroll and taxes yourself, here are the most important things to note.
As a small business owner, before you start preparing taxes and payroll for your team, you should apply for an Employer Identification Number. Applying for an Employer Identification Number (EIN) is one way of information the Internal Revenue Service (IRS) about the existence of your business. It is a way of protecting your business against the Federal Government that requires all businesses to be tax-compliant. read more here on how to apply for EIN. The next step is understanding if your workers are either independent contractors or employees. W-4 are usually meant for employees. On the other hand, if the workers are independent contractors, they will need to fill W-9 forms.
One way to simplify the payroll and tax preparation process is by creating a payment schedule. The most important dates that must appear in your payment schedule are employee pay dates, tax payment due dates, and tax filing dates. Always have in mind the state regulations when setting the dates. After setting the payment dates, you should ensure that you have the money need to pay all your workers on the set date. It is common for small business owners to flaunt tax laws and guidelines as set by the IRS since it is a sophisticated process. Withholding the correct amount will ensure that you don’t get into problems with the IRS. IRS Withholding Calculator or paycheck calculator can help you determine the right amount to withhold as taxes.
Record keeping is a crucial task for every business owner to boost efficiency. The best way to keep your tax records is by making a pay stub. On the homepage of this website, you will learn a few tips for making a pay stub. Also, you should ensure you file all the tax forms. Filing of tax forms should be done on time to avoid issues with the authorities and fines.
Since tax preparation is a complicated process; most small business owners opt for payroll services. Identify the right experts that will handle your payroll system smoothly and efficiently. Therefore, if you want to do payroll and tax services yourself, you should use the ideas discussed in this guide.