Can I Do Payroll Online for My Small Business?
Online payroll is not only doable, but it is an emerging best practice for small businesses. Small businesses, especially with contract employees, simply cut checks in the past. But recently, the emergence of strong payroll software, online banking, and remote workforces has pushed online payroll services to become a necessity.
Can I do My Own Payroll Online?
Yes. Many small businesses owners run their own payroll during the beginning phases of their business. Online payroll software can help business owners run compliant and efficient payroll. These SaaS companies help with payroll taxes, documentation, withholdings, and payroll calculations.
Small business owners may also ask “How can I do payroll without a program?” In other words, “How do I manually process payroll?” Manual payroll processing is difficult and takes a lot of time from a business owner, even if the employee headcount is small.
Can you run payroll by yourself without a program? Yes. Should you? Usually not. The IRS claimed 7 billion in payroll errors in 2021. Over a third of businesses failed to be compliant, costing an average of $850 in fines per business that made an error.
Processing payroll is a matter of calculating state, local, and federal taxes, processing the payroll on a specific cadence, and calculating overall pay per cadence. It also requires research in order to maintain compliance with both local and federal laws. Next, you have to cut checks or manage direct deposits and then report it all in your accounting books.
A payroll software will do the majority of this for you for a low cost per month. The best way to ensure your payroll is being done correctly is having a payroll software managed by a payroll expert. For smaller companies that don’t need a full-time payroll specialist, an outsourced payroll professional or part-time worker is a good avenue.
Can I Do Payroll For Myself If I Am Self Employed?
Payroll should not only be done for yourself if you are self employed, but it is required. The IRS does not make exceptions for sole proprietors who are the only employee of a business. They still must pay payroll taxes and follow all other matters of compliance.
Here is an overview for doing your own payroll. A lot of this process can be automated with payroll software.
- Apply for an EIN. An EIN is how the IRS identifies a business entity. Your state may require a state EIN as well.
- Second, fill out a W-4. Self-employed individuals can get paid by either an owner’s draw or by salary. An owner’s draw makes you more likely to be audited by the IRS.
- Set a payroll cadence. The most common payroll cadence is bi-weekly. Other options are weekly, semi-monthly, or monthly.
- Mark important dates. There are 3 major important dates for payroll: employee pay dates, tax payment dates, and tax filing deadlines.
- Calculate your pay and taxes. This step is to understand how much you will be paid each pay cycle and how much is taken out for federal and local taxes.
- Pay your taxes. These taxes are usually paid monthly.
- Document tax forms and fill-out a W-2. As an employer, you should send in your employer tax return and file your taxes and W-2 accordingly.
What Are The Best Payroll Options for Small Business and Self Employed Individuals?
The best payroll option for small businesses and self employed individuals is a combination of payroll software and professional help.
For a self employed individual, buying a cheap payroll software and doing all the oversight yourself is not impossible. However, there is a lot of research that should go into this to make sure your business is compliant with federal and local regulations.
The best payroll option for small businesses, and usually the easiest way to do payroll, includes buying a more robust payroll software and either outsourcing the work to a professional, or having a trained team member do it part-time.
The best payroll software for your business is dependent on the current needs and future of your business. For example, if an HRIS is something you want to grow into, this could change your choice. Using third-party review sites like G2 and Capterra can help provide clarity into what software you may want. Gusto is a strong, low-cost option for small businesses with great add-ons. Rippling is consistently rated as one of the best overall platforms, but it is a bit more expensive than Gusto.
How Milestone Can Make Payroll Easy for Your Small Business
Milestone’s team of payroll experts is built to keep your business compliant, to save you time, and to give you peace of mind. Our team of payroll professionals can tackle even the most complicated payroll situations. You get back office expertise at a fractional cost. Reach out to us today to get started.
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