Can I Do Payroll Myself for My Small Business?

The Milestone Team November 16, 2022
Can I do payroll myself for my small business

Yes, you can run your own small business payroll, but it is not always the best idea.

Running payroll without services can save you a few hundred dollars today, but it could cost you in the long run. In order to save money, many small business owners do payroll manually rather than using payroll software or services. But this can lead to tax penalties and other issues, which can be costly. 

If you are wondering how to do your payroll on your own, the simple answer is that you probably shouldn’t. You can’t simply write a few checks every two weeks on your own. You have to make sure you are withholding federal, state, and local taxes, sending these payments to the IRS and your state, and filing your tax forms on time. And this is just the start of the process. Outsourcing this process to experts can ensure you don’t make mistakes that can lead to costly issues. It also frees up your time to work on other areas of your business.

One of your most important responsibilities as a small business owner is making sure payroll is on track. In addition to enhancing employee satisfaction, accurate payroll keeps you in compliance. As a small business grows, payroll can quickly become complex, so outsourcing your small business payroll services to experts is a simple way to give your business a competitive edge.

Can I do payroll myself for my small business?

Is there a free payroll service?

Unless you do payroll manually, there is no free payroll processing solution. Payroll software and payroll services all charge a fee. 

The term “manual payroll” refers to the process of paying employees without the use of software or services. Deductions and benefits must be calculated and remitted manually by the small business owner, and the employees’ net pay must be calculated and remitted.

The do-it-yourself approach can save you money if you do not have the funds to hire a payroll service. You can do payroll for your small business yourself if you have the right knowledge, time, and a sturdy calculator. While this is not the recommended option, it still is an option. 

When it comes to manual payroll, there are three main phases: run payroll, pay payroll taxes and file quarterly and annual tax forms. You can do your company’s payroll on your own for less money, but it is time-consuming and prone to error.

What Is the cheapest payroll service?

The cheapest payroll service is Wave. It is the best software in the market right now at its price point. The price breakdown is $35 monthly & $6 per active employee. It includes:

  • Direct deposit, T4s, and full tax remittances.
  • Guaranteed to receive accurate results.
  • An easy-to-follow step-by-step guide to help you set it up.
  • Easily accessible forms and documents.

Despite this, cheap payroll software carries significant risks. Generally, you get what you pay for when it comes to compliance. Payroll plays a crucial role in business decision-making and compliance. Long-term small business services are worth investing in. If affordability is a concern, Gusto – our simple small business recommendation – provides inexpensive starter tiers for small businesses.

What Are the top payroll companies?

The top payroll companies recommended by Milestone include Gusto and Rippling.

Gusto integrates payroll, benefits, hiring, management resources, and more seamlessly. With Gusto, your team will become empowered with a single, trusted system. A small business looking for a straightforward and simple payroll solution will find Gusto payroll affordable. Currently, Gusto has limited integrations, but it’s on its way to being a full-service HR solution. It is the most cost-effective option for payroll and can be very user-friendly for employees and managers.

Rippling is another great choice. In one comprehensive platform, Rippling integrates payroll, benefits, HR, and IT. Automating a lot of your busy work can be achieved by bringing all your employee information and systems together. With integration with over 400 apps, Rippling is a technologically advanced and modern solution. It has unique features, such as inventory management and device management, but it is simple to set up and use. Small businesses with remote employees will likely find Ripple to be an effective solution.

How do you do self-employed payroll for a small business?

While you’re building a small business, paying yourself may not be the first thing that comes to mind. Business structure, stage of growth, personal finances, and other factors determine how you pay yourself as a business owner. As your business grows, knowing the factors to consider and using the right payment method will help you succeed.

As a business owner, the easiest way to do payroll for yourself is a salary or owner’s draw:

A salary allows you to pay yourself a regular salary, withholding taxes from your paycheck as if you were an employee. The IRS requires “reasonable” compensation, which means your salary should be comparable with what others in your industry would earn doing the same job. As a recurring expense, salaries are very stable and can be budgeted into your business costs. Unlike an Owner’s Draw, a salary must adhere to the reasonable compensation rule, even when business is slow.

An Owner’s Draw allows you to withdraw money from your business’ profits as needed. You can withdraw up to the amount you put into the company. While you don’t have to pay taxes upfront every time you take a draw, it’s a good idea to budget for your taxes periodically. Owner’s Draw is very flexible, and you can draw your compensation based on how well your business is doing. 

There are many factors that influence how you are paid as a business owner, such as the business structure, stage of growth, Personal finances, and other factors. It is important to analyze your business in each of these categories and know your options before you make your choice.

What Is the Easiest Way to Do Payroll for a Small Business?

The easiest way to do payroll for a small business is generally to outsource the process. Doing it by hand can quickly become time consuming and can also increase the risk of errors and issues like IRS audits. On the other hand, hiring a full-time payroll specialist can be too expensive and unnecessary for a small business with only a few employees.

Milestone Simplifies Payroll For Small Businesses

If you’re looking for the easiest way to do payroll for a small business, Milestone can help. With combined decades of experience in accounting and human resources, Milestone is ready to help you manage your payroll and grow your business. Contact us today. We are ready to answer your questions.

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