If you run a small business and have employees, payroll processing is a necessity. What goes into processing payroll? Who typically handles payroll? What are some methods of handling it? In this article, we will discuss everything that goes into payroll processing, from calculating hours worked to filing taxes. We'll also talk about the different options for small businesses when it comes to payroll services. Let’s get started.
Calculating Hours Worked
Calculating hours worked may seem like a simple task, but there are actually a lot of factors that go into it. You have to account for regular hours, overtime, vacation time, sick days, and more. And if you have employees who work different shifts or on different days each week, it can get even more complicated. Most accountants and business owners will make use of various software to simplify this aspect.
Calculating Employee Income
Once you've calculated the hours worked, you need to calculate how much each employee is owed. This includes their regular pay rate, any overtime pay, and any other special rates (such as for shift differential). Again, accounting or payroll software can help with these calculations.
Withholding The Proper Amount
After you've calculated the wages owed to each employee, it's time to start withholdings. This includes federal and state taxes, as well as Social Security and Medicare. You may also need to withhold for other things like health insurance or retirement savings plans. Once you've made all the necessary withholdings, you can then calculate the net pay for each employee.
Paying Your Employees
Once you've calculated the net pay, it's time to actually pay your employees. This can be done via direct deposit, a paper check, or a payroll card. And don't forget about paying yourself - as the business owner, you're also an employee.
Payroll Methods for Small Businesses
As the business owner, it’s entirely up to you how your payroll is managed. Small business owners will start out spending an average of 10+ hours per month on payroll alone. Is this necessary? Often, business owners continue to manage their own payroll to avoid incurring additional expenses. What payroll methods are available?
- DIY
- Online payroll services
- Working with a professional payroll provider, such as a CPA
Why Use Specialized Payroll Services?
Managing payroll on your own as a business owner with 1-3 employees may not be a daunting task. But the responsibility for accurately calculating hours worked, withholdings, and pay rates becomes evermore intimidating as your business grows.
Payroll software can take away some of the questions associated with managing it yourself. Tracking hours, overtime, vacation days, and so forth, all becomes easier with the assistance of software. But the responsibility still ultimately falls on your own shoulders.
Full-service payroll providers offer the most convenience. Working with a CPA to handle your payroll takes all of the intimidation out of it. Accurate calculations, the right amount of withholdings, and being well prepared for tax season are all taken care of. When questions arise, you have an educated team ready to answer them. The concern of keeping up with federal & state laws is completely taken off of your shoulders.
Best Payroll Services in California
Haro CPA is a full-service accounting practice with two locations in California that offer payroll services and business consulting. We provide accounting services for businesses in California and across the nation. Our knowledgeable and pleasant staff can help you with the setup of your payroll and maintaining it on the day-to-day. Often, small business owners shy away from outsourcing their payroll services to avoid incurring another expense. But the cost of professionally managed payroll services are much more affordable than many business owners assume. The monthly cost varies greatly depending on the number of employees you have, as well as the complexity of your finances. Contact us today to see what specialized payroll services would cost your business.