In the U.S, there are around 30,748,033 small businesses where employers must create the perfect payroll management system for their business.
Learning how to manage employee payments can be stressful, but it’s crucial as your employees are the foundation of your business. Perhaps you’ve recently opened your doors and you’re after guidance in this area.
Sounds like you? Luckily, you’ve come to the right place. Here’s everything you need to know.
1. Hand Out W-4 Forms to New Hires
On your quest to manage payroll, start by handing out W-4 forms to your team. This lets employees declare any allowance that they are claiming which will reduce the amount of tax paid. Note, this should be given to every recently hired employee to streamline the process.
2. Choose the Best Payment Method
Next, figure out how to accommodate employee pay as there is a range of payment methods depending on your preference.
One of the most popular methods is via paychecks which you either write out or print. This is useful because many employees aren’t comfortable with sharing their bank details. Sounds tempting? Then use an online pay stub maker to get started.
Or, you may want to use direct deposit. Instead of handing out paychecks, transfer your team’s wages into their bank via an electronic funds transfer. Other employers may choose payroll cards which is a prepaid card which employees can withdraw at an ATM.
Another option is paying employees with cash. But make sure that every cent is declared to the IRS so that you pay the correct tax.
3. Decide On a Payroll Schedule
You’ve got a pile of employee paychecks ready, so it’s time to hand them out. The only question is: when?
Business owners usually distribute salaries weekly, bi-weekly, or twice per month depending on the employees’ pay performance. Whichever you choose, inform employees and stick with it so your team can base their lifestyle around it.
4. Pay Employee Taxes on Time
As you manage employee payments, you must factor in your team’s taxes. It’s important to withhold the correct amount of taxes from each employee’s paycheck so that it can be paid to the IRS. If not, you could risk a hefty fine and, in the worst-case scenario, jail.
5. Submit W-2 Forms
Although taxes must be declared every quarter, you must send employees a W-2 form at the end of the year. For new business owners, consider hiring an accountant who can guide them through the process. Or, use robust payroll software and it will automatically send these forms to the correct recipient.
Manage Employee Payments Today
Hopefully, this article has taught you how to manage employee payments.
Make sure every hire fills out a W-4 form and you choose the best payroll method that aligns with your business. You should also create a regular schedule and properly file your team’s taxes to prevent any problems later on. Good luck!
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