With things opening back up and summer just around the corner, many businesses are ramping up their operations for busier times. For new businesses, there’s even more exciting work ahead.
Setting up payroll will be one of those major tasks. With a little guidance and patience, however, you can put payroll on the backburner and dive into your favorite parts of running your business.
Remember fine print
Depending on the classification of your team members, it’s always important to note the differences between independent contractors and employees.
These distinctions have legal consequences and therefore will factor in on tax withholdings. As you add to your team, ask about pay preferences and work with new employees on answering questions related to these withholdings.
Set up pay periods
Regardless of your pay schedule, the IRS will base withholdings on the timeframe you select.
While bimonthly and monthly pay periods are common, also make sure to double check locally on the best practices and legal standards.
As a business owner, you have the responsibility to set up an Employer Tax ID and submit tax details to the IRS and state agencies.
If you fail to do so, you won’t be able to process taxes and you can even face penalties. The good news is that you can easily apply for an EIN online.
As you begin onboarding, take the time to verify your new employees’ tax information, such as their W-2s.
Businesses are obligated to help employees understand their withholdings and that the right amount is noted on all the appropriate paperwork.
Stay current on records
Three years is the bar. Per the IRS and state agencies, you’ll want to hold on to your tax-related records for at least three years after employee separation.
Remember that regular paperwork submissions to the IRS are mandatory. As such, businesses must stay current and keep additional tax information at hand. You can get specifics on tax documents and deadlines by visiting the IRS’s website.
Don’t feel stuck as you ramp up your business and establish new processes. Our mission is to help you realize your business intentions. After a challenging time, you can count on our unwavering attention, support and advisory services. We’ll be at your side through it all. And most of all, we want to help you focus on what matters the most to you, which is running your business and seeing your vision realized.
Contact us today if you have any questions.