Payroll 101: A Quick Guide For New Business Owners

If payments are tricky for your business, your finances are always going to be a mess! That’s the first thing to think about when you’re putting your business together. 

However, an efficient, well optimized payment system isn’t just something you need to provide at the front end. You need to have a quality, reliable payroll system working behind the scenes too. 

And if you’re new to running your own business, as well as having your own staff, we’ve put together a quick 101 on setting up and managing payroll for the first time. Check it out below. 

When Do You Need to Set Up Payroll?

When you have employees! And yes, that could even just be yourself, if your business is set up as a company. 

And you’ll want to get this process started as soon as possible, as payroll isn’t done in a day. It can usually take around 5 to 7 business days for everything to come through properly, including your EIN (employer identification number).

An EIN makes sure you can actually pay everything you’re obligated to, as well as file your taxes under the right operating name. 

And remember, you won’t be able to pay anyone until you have payroll set up and ready to go. You don’t want to be late with wage payments, federal taxes, or other payroll obligations. Try to prepare as early as possible.

What Payroll Covers

It’s not just what you need to pay your employees. It’s every other financial factor tied into these wages as well. As we mentioned above, federal taxes come under payroll, but local and state taxes will have to be accounted for as well. 

On top of that, any benefits you offer, including health insurance and social security, are taken at the same time. 

And while that does mean payroll can be quite complex, it actually helps to simplify where and when your wage payments and legal obligations ome out. 

Who Can Do Payroll for Your Business? 

Well, that’s up to you. You can choose to do so either in house or choose to outsource it to a payroll service. You just have to decide on the option that works better for your time and budget. 

Of course, if you do your own payroll, you’ll need to set up a small business accounting software that has payroll built in. Software like this usually takes care of any payroll intricacies for you; you just need to input the right data and make sure it’s uploaded properly. 

It does also mean you need to be a top notch bookkeeper in your own right, but many people are able to keep records without much of a problem. It’s knowing what to do with them that’s often the main issue. 

If you’ve never run payroll before, this can be quite an intimidating time for your business. However, once you know what payroll covers and how you can do it, it’s much more approachable.