Jun 11, 2022 Author: Accounts Junction
As a small business owner or entrepreneur, you started your business following your passion to do what you love. You want to carve a niche for your business and make a living from it.
Although your passion and idea thrive on you to start something of your own, it’s just one part of running your venture. You also have to take care of other administrative tasks and compliances.
And one such thing is payroll processing.
Payroll processing is important business activity to initiate payments to your employees or staff. Managing accurate pay at right time is crucial, as without paying your employee, you can’t get your job done.
Payroll processing is the calculation of how much money you owe to your employee at the end of the payment period. In addition to managing pay, you need to maintain timesheets, employee details, payroll schedules, taxes, and much more.
How to process payroll?
You can manage the payroll of your business in the following four ways:
- Use payroll software
- Outsource to payroll service provider
- In-house payroll expert
- Do it on your own
The best option for payroll processing is payroll software or outsourcing to a payroll service provider. These are the most cost-effective options and ensure compliance. However, if you can opt for an in-house payroll service provider, it can add up to your administrative costs and are expensive.
The last option you have is doing it on your own, which is not a viable option unless you are a payroll professional. And also you won’t like to let your valuable time on the tedious and time-consuming task of payroll processing.
How is payroll processing done?
Collect Paperwork from your staff:
The first step in payroll processing is to obtain important employee information. Ask your staff/employees to fill out the necessary form along with tax forms. You also need to take care of the required paperwork and documents according to state and federal laws.
Calculate the Gross Pay:
You need to calculate each employee’s pre-tax earnings for the pay period. If you have a salaried employee, then you need to divide the annual salary by the number of the gross pay period. For workers, you need to multiply the wage rate by the number of work hours.
Calculation of tax withholdings:
The third step in payroll processing is the calculation of tax withholdings. As an employee, you must calculate employee salary after withholding payroll taxes and do necessary deductions. You must comply with federal and state tax laws and compute tax accordingly.
Processing of payments to the employees:
After all the calculations and necessary deductions, the next step is paying either via checks or direct bank transfer.
Filing of taxes:
Filing payroll taxes is the next step. You need to file taxes from withholdings of your employee’s pay to the government.
Employee benefits:
You need to invest the deduction made from the employee’s pre-tax earnings into various benefits and retirement schemes. This plan may include retirement plans, healthcare plans, health savings accounts, etc.
Updating payroll records:
Updating payroll records is the final step of payroll processing. It reflects the latest payroll that is processed. You must maintain a proper record of information about employee wages and salaries, tax forms, overtime records, payment records, and more for audit purposes.
Handling payroll processing is a tiresome and time-consuming process. Moreover, as your company grows, it becomes more complicated with the additional workforce.
But you can avoid going through this process by outsourcing payroll services to a professional payroll service provider like Accounts Junction.
Accounts Junction is a team of dedicated CPAs, CA, and accountants having years of expertise and knowledge in handling the payroll processing and taxes of our clients. Our professionals are well-versed and equipped with the latest cloud software and employment rules and regulations.
Outsource your online payroll processing to us.
