Did you know 0.45% of 21,783 people report that their paycheck isn’t delivered on time?
This can be a problem if you don’t have a system set up for doing payroll for employees and contractors. It can be hard to manage the payroll all by yourself.
In this article we will go over what you need to know about doing payroll and how to manage it.
What Information Is Needed to Do Payroll for Employees
Having employees means that you have to take out their taxes for them. First, you have to make sure you have all the necessary documentation to do the taxes right. You will want to get the documents when you hire them and not chase them down at the last minute.
These documents will include:
- Your Company’s name, EIN, and address
- State tax withholding ID number
- If it is possible your local tax ID numbers
- Your state unemployment account number
- A copy of the employee’s bank statement if they are getting paid in a direct deposit
- You will need to get their information which you can get from their w-4
- You and the employee need to fill out the I-9 form
What Information Is Needed for Contractors
It is different with contractors, as there are different tax documents that you would need to be aware of. One of those factors is that contractors are not considered an employee. This is important to remember as you would not be taking taxes out of their paychecks like you would with a regular employee. They are responsible for paying their own taxes.
These documents are:
- A W-9 form that contains their taxpayer ID, Social Security Number or Employer Identification number
- A 1099 form
- A Contract that you and the contractor sign
The Different Payroll for 1099 Employees and W-2 Employees
As stated above, Contractors are responsible for their own taxes. A 1099-MISC is so you can report what you pay the contractor. Usually this is if it is over $600.
While a W-2 is for your employees that you hire on and withhold their taxes.
This is important to have all this information so that you can do payroll easier.
What to Do if an Employee Doesn’t Have a Bank Account
If you hire someone and they don’t have a bank account, you can offer a payroll card. The card allows you to do payroll for them and allows them to get paid. The card is like a preloaded debit card.
What Are the Types of Payroll
There are four types of payroll that you need to be aware of. You will have to choose which one is the best for your business.
If you already have employees, you can do a survey to see which type they would prefer.
This helps in keeping your employees happy, so they won’t quit because they are not getting paid in a way that is efficient for them and your business.
How Do You Manage Payroll Effectively
Managing every employee and contractor can be hard especially when taking payroll on manually. This can leave you spending more time figuring out everything by hand.
Luckily there are places that will help you manage your payroll. That is exactly what we do here at Ezyhire. We help automate the process so that it will help you save money and time in the long run.
Using payroll systems for your business helps to not make mistakes in payroll.
You will have less stress about having to gather documents, and having the IRS audit you because of missing documentation. Managing payroll effectively means onboarding is a breeze.
By using a system like Ezyhire, you can be sure to keep your business and employee’s documentation in secure hands. It also makes the process of onboarding and payroll move faster.
How to Calculate Payroll
This will depend on what type of payroll that you choose for your business. If you need to figure out a estimated weekly payroll you need to divide their annual salary by 52.
This means if you choose the monthly payroll you need to divide it by 12. With bi-weekly it is 26. Semi-monthly you would divide it by 24.
Calculating Payroll Taxes
One of the tough things about having employees is figuring out how to calculate payroll taxes. Our platform is capable of calculating this for you without any hassle.
What Are the Five Mandatory Deductions
- Federal income tax
- State tax
- FICA taxes
- Wage garnishments
Benefits of a Payroll Management System
The benefits of a payroll management system beats trying to do everything yourself. When you are doing payroll and deductions, it will not take you hours when using the system.
The management system can make the hiring and the onboarding process smoother. It can also help in generating accurate pay slips, so you will not have to worry about inaccurate information.
You do not have to learn every tax rule to make sure you are compliant. This is not to say that you should not be aware of tax rules, it will make it a lot easier and less time consuming.
It will make year-end reporting automated and stress free.
Six Steps in Managing a Payroll System
- Collect information of wages
- Gather payrolls for every pay period
- Get the gross wage of your employees
- Determine the tax withholding
- Deduct requirements from the gross pay
- Report and make payments to the tax authorities
Do You Need Proof of Payroll
You do need proof of payroll, and with having a payroll software in place, you will have the compliance you need. This is important when you need to submit a certified payroll report.
Why would you want to make your payroll for employees harder than it has to be? Make the hiring and onboarding process a breeze.
You can make sure to save time and money by booking a demo with us today.