What Is the Easiest Way to Do Payroll for a Small Business?
The easiest way to do payroll for a small business is by hiring a comprehensive payroll service. You can use a payroll service even if you only have one employee to prepare paychecks and pay payroll taxes. If you miss a payment or report, you may be fined or penalized, and a payroll service can prevent this. Employing a payroll service can help you achieve accurate, compliant, and on-time payroll.
What are payroll services?
Payroll is the obligation of a company to pay its employees the correct amount at an agreed upon time. A payroll service is a company that takes care of your payroll function. The payroll company makes sure your employees are paid on time and that you are in compliance with federal and local laws.
Payroll services assume responsibility for all aspects of payroll for another company. This service is beneficial for employers who care about their time and want accurate and timely payment of their employees and payroll taxes.
Most payroll services include:
- Processing the employee’s hours of work.
- The process of cutting checks.
- The function of depositing funds.
- Making sure all employees are paid the correct amount on time.
Having payroll services provides employees with customer service and a specific contact person to address any and all of their payroll needs. Payroll is processed quickly, and taxes are calculated and paid automatically. Your employees receive W-2 and 1099 forms automatically. Benefits like these are why more and more small businesses are working with payroll services.
How do you do self-employed payroll?
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.
Let Milestone ease your stress.
As a small business owner, you have enough to stress without worrying about payroll issues. This is where Milestone comes in. Milestone’s payroll experts know there is no margin for error when it comes to payroll processing. We ensure success by using the right tools and designing the right processes.
Our team has combined decades of experience in HR, accounting, and payroll. Contact us today to discuss your Payroll and get answers to your questions.
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