Small business owners find themselves wearing many hats, being a payroll administrator among them. Managing payroll can be one of the most arduous administrative tasks for a company, especially if you aren’t an accounting or human resources expert. Read on to learn the ins and outs of payroll administration, and how turning to an outside expert can make it easy.
What is payroll?
Payroll is a list of a company’s employees that details how much compensation they are to be paid within a period of time, minus any deductions such as taxes, eligible health insurance premiums or eligible retirement plan contributions.
For example, if your business pays hourly employees every two weeks, at the end of that period, your payroll would be a list of your employees, how many hours they each worked, their individual rate of pay, and a calculation to arrive at their gross earnings. After individual deductions are subtracted, your payroll indicates the net pay your company will pay each employee.
Payroll management refers to the process of tracking the number of hours that each employee works, accounting for their wages and deductions, and paying employees.
Here are basic elements of a payroll to keep track of:
· Employee hourly rate or salary
· Tax withholding information from employee W-2 forms
· If hourly, number of hours worked per employee
· Federal, state and local payroll tax rates
· Social security, unemployment and Medicare taxes
· Deductions for each employee such as health insurance premiums and retirement plan contributions
Types of Payroll Management
Do It Yourself
If you only have a few employees, you may be able to manage payroll on your own. You’d need to keep track of all the information detailed above, and calculate employee payments and disbursements yourself. This will require, however, a commitment of time.
To aid you in managing payroll on your own, you can use software like Paylocity or Paychex. Employees can log their time directly on these platforms, which will then automatically calculate payroll for your business and also can integrate with your bank account to disperse earnings to employees.
Almost half of small businesses choose to outsource payroll, according to the National Small Business Association. Outsourcing payroll can save business owners several hours per week, which can equate to hundreds of dollars per month. When you outsource payroll, your service provider will handle all the calculations, deductions and disbursements for your business. Outsourcing can also make managing payroll taxes much easier.
Need help with payroll administration?
Our team of experts at Gift CPAs is here to help you navigate and process payroll. We can provide guidance and assistance as you grow your business to its full potential.
We look forward to meeting you virtually or at one of our five locations in Harrisburg, Mechanicsburg, Myerstown, Ephrata or Lancaster!