Pay Day! How to Do Your Own Payroll

calculator and stack of coins

You've decided how to pay your employees, what constitutes overtime work, and even the ways in which your team members keep track of their time at the office.

But no matter how well-organized you are, the thought of the payroll process still intimidates you. 

You don't yet have the money to hire an accountant, and truth be told, you don't have enough employees to justify doing so anyway.

Instead, you want to learn how to do your own payroll -- the easy way. 

Read on to learn everything you need to know. 

Take Care of the Technical Stuff

If you want to learn how to do payroll for small business, you need to handle the technical stuff before you do anything else. 

Click here to get an Employee Identification Number, or EIN for short. 

Next, make sure that each of your employees completes their own W-4 form, as well as an I-9 form. 

You should also decide on a clear payment schedule. Will the employees be paid weekly, monthly, or on a more complicated schedule? (In some cases, local laws dictate the payroll periods you're able to select.) 

You'll also need to create a direct deposit system so that you can pay salaried/hourly employees. Make sure that these payments come from a separate bank account that's used exclusively for payroll. 

Use a Pay Stub Generator

Now that you know the basics of how to do your own payroll, we strongly suggest that you use a pay stub generator from sites like paystubcreator.net to make the process easier. 

You can specify the reasons for payment, the payment date, the amount, and even show how much money you've withheld for tax purposes. 

Plus, having records of pay stubs on hands makes it much easier to handle filing your taxes when the time comes. 

Calculating Pay and Taxes

The final step in the payroll process is determining the value of each paycheck and the taxes associated with it. 

First, calculate gross pay -- how much you owe your employee for the hours or pay period. 

Then, you'll need to calculate federal, state, and local income tax withholdings. Don't forget to account for FICA tax deductions, health plans, and even retirement contributions, too. 

Then, you'll send your paychecks to your employees, and make the necessary payroll tax deposits. These tax deposits include pay withheld for taxes as well as any deductions for Medicare and Social Security.  

Learning How to Do Your Own Payroll Is Possible

As you've learned from this post, understanding how to do your own payroll is often much less of a challenge than you may have anticipated. 

You just need to create pay stubs, keep careful track of all your tax obligations, and make sure that you submit quarterly reports to the IRS. 

Looking for more ways to save money on your business's operating costs? Want to understand how to calculate a fair salary for your team members? 

Our blog consists of simple, step-by-step guides that will walk you through the basics of running a successful business. 

Keep reading it to improve your skill set. 

 

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