A Small Business Guide to Payroll Management
After the employee earns the wage base limit of $127,200, stop withholding and contributing. After you are set up and have chosen a payroll system, the next step of managing payroll is running payroll. This advice goes out to business owners who have contractors aside from full-time employees. Since contractors and freelancers require a whole slew of different documentation, it can become difficult to keep up with it all. It’s important to check what is the legally required minimum number of paydays for your country. If business development manager requires you to pay your employees twice a month, you have to know.
Put in place measures that will alert you for essential deadlines or those you consider a priority. Clockify is a time tracker and timesheet app that lets you track work hours across projects. With their expertise, you can also work on expanding your benefits responsibly. For example, improving your PTO , to make your business more tempting to potential employees.
Simply, divide the annual salary by the number of pay periods. While it seems like an unnecessary step when payroll software automates the process, remember that mistakes can always happen, and business owners are ultimately responsible for errors. Before you start processing payroll, give your payroll software everything it needs to cut accurate paychecks and make proper tax payments and contributions. Above are useful tips and tricks for managing payroll for your small or mid-sized business. While some find it too complex, others can’t deploy it because of a low budget.
At what point should a small business appoint a payroll point person or hire a dedicated payroll manager? When payroll becomes a headache and starts to impede on other projects. If you start to have payroll errors or you’re struggling to keep up with rules and regulations, consider hiring a payroll manager. And as your business continues to grow, consider expanding the role and creating a dedicated payroll team.
No matter your pay structure, you must have a way to track and calculate wages and other payments owed to employees when processing payroll. When you set up your payroll services, you need to make sure that you abide by always laws. Check state and federal regulations to make sure that you are paying your employees as often as you should.
Try our payroll software in a free, no-obligation 30-day trial. Part of understanding how to manage payroll is knowing what to do with records. The Medicare tax rate is 1.45% of each employee’s gross wages. But, there is an additional employee tax of 0.9% for all wages over $200,000 , $250,000 , or $125,000 . The Social Security tax rate is 6.2% of each employee’s gross wages up to $127,200 . You also pay 6.2% of each employee’s wages for a total of 12.4% Social Security taxes.