Managing payroll is an important obligation in your business if you have employees. If you only have a couple of staff, you can do a DIY payroll processing with the help of Payroll Software Singapore. While for those who have a number of employees or don’t just have the time for it, you may avail of a payroll service.
Knowing the process of payroll is vital especially for young entrepreneurs. Here are the steps to achieve it.
1. Oblige your employees to secure filled out W-4.
Each worker is required to complete a W-4 form with accurate information to record everyone’s filing status as well as monitor their personal allowances to get paid. The more compensations or dependent labors there are, the lesser payroll taxes are deducted from their paychecks on every payday. Bear in mind that for every new worker you employed, you must file a new employment report.
2. Get an Employer Identification Number.
Ensure that you already have EIN before doing payroll by yourself. The EIN is similar to a Social Security Number (SSN) for business and it helps IRS to classify various company entities and all those who give salaries. Getting an EIN is not hard to do since you can process it online through the IRS website. Also, you may be required to obtain an EIN number from your state. Refer to your employer’s tax resources for further information.
3. Get insured and establish a payroll schedule.
The next thing to do after getting an Employer Identification Numbers is to ensure your business to a reliable insurer with the consideration of your employees’ compensation. Then, set a payroll period and make it known to your employees by posting it in the workplace. The schedule should include dates for when is the payday, deadlines of tax filing and tax payment.
4. Compute and withhold income taxes.
With regards to paying employees’ salaries, you have got to identify which federal and state taxes to retain from your workers’ salary through the IRS’ Tax Withholding Estimator and your state employment resources or a credible paycheck calculator. Monitor also both the employer and employee share of levies as you progress.
5. Settle the taxes.
Collect data from your employees’ W-4s, state, federal, benefits, and insurance requirements to calculate every worker’s deductions. This is done usually every month. But before doing this step, you’ll need to study your state’s tax guidelines first as every state has its own policies to avoid any delays.
6. File your tax returns & W-2s.
Make sure to submit your employer’s federal tax return typically done every quarter and any local or state returns. Finally, always remember to prepare your yearly filings and W-2s before at the end of every year.
With all the information and documents you have to keep from all your employees, it is recommended to make and uphold a payroll register so you can easily track them and stay organized. Moreover, this will help you to record the total gross pay, deductions and net pay for all the payrolls. Another wise thing to do also is to create a backup file for all the payroll info.