A Step-By-Step Guide on How to Prepare Payroll and Taxes Yourself
Running a small business is usually more challenging because of the limited workforce. As a small business owner, you will be required to focus your time, energy, and talent on different tasks of the business. Hiring a team to handle the activities might not be financially sustainable, especially at the beginning stages. As a small business owner, you should be prepared to take care of most of your business tasks yourself, even if they are challenging. The two important things that you should learn how to do are preparation of taxes and payroll for your business. If you decide to do payroll and taxes yourself, here are the most important things to note.
As a small business owner, before you start preparing taxes and payroll for your team, you should apply for an Employer Identification Number. Applying for an Employer Identification Number (EIN) is one way of information the Internal Revenue Service (IRS) about the existence of your business. With an EIN, the Federal government will be able to distinguish your business as a tax-paying entity. In this website, you will learn about the process of applying for an Employer Identification Number. Next, you need to inform the IRS if your workers are either employees or independent contractors. For your employees, you will need to fill W-4 forms. W-9 forms are usually meant for independent contractors.
The next step is creating a payment schedule. Employee pay dates, tax due dates, and tax filing dates are some of the important dates that must appear in your payment schedule. Always have in mind the state regulations when setting the dates. After setting the payment dates, you should ensure that you have the money need to pay all your workers on the set date. It is common for small business owners to flaunt tax laws and guidelines as set by the IRS since it is a sophisticated process. Withholding the correct amount will ensure that you don’t get into problems with the IRS. IRS Withholding Calculator or paycheck calculator can help you determine the right amount to withhold as taxes.
Record keeping is a crucial task for every business owner to boost efficiency. A reliable record-keeping approach that you should consider for your business is making pay stub. On this page, you will discover more info. about the process of making a pay stub. Besides, you should have all your tax forms filed. Late payment usually attracts huge penalties that might cripple your business financially.
Most business owners prefer working with payroll preparation experts to avoid the daunting and stressful task. Ensure that you find the best payroll services for your small business. Therefore, if you want to do payroll and tax services yourself, you should use the ideas discussed in this guide.