“How do I do payroll?” That’s probably not the first question you asked when you decided to start a business—it probably wasn’t even your 50th question. But if you’re going to hire employees, you will need to know how to do payroll.
Running payroll goes far beyond multiplying employee hours by the hourly rate and handing over the paycheck. The process can be complicated—even if you only have one employee.
But, you’re a small business owner. You had the perseverance and patience to start a business. Odds are, you will be able to learn payroll basics, too.
How to learn payroll basics
Whether you choose to outsource your payroll, hire an in-house accountant, or do it yourself, you will benefit from having some payroll knowledge. Here are six ways to learn payroll and get started.
1. Schedule a one-on-one with your accountants.
Even if you plan to handle your payroll tax filings on your own, your accountant can be a great advisor for your business. Your CPA can answer your questions, help you establish your accounts with tax agencies, and recommend a payroll software system for your business.
Your accountant can also explain how to make payroll tax deposits and file payroll tax returns. Be sure to notify your CPA about any IRS notices that you might receive regarding payroll taxes, especially if the CPA’s office will be handling your payroll tax filing.
2. Check out the resources offered by your payroll software provider.
Look for how-to articles on your payroll provider’s website. You can also ask the customer support department for help.
Ask your payroll provider if they offer free setup or a tutorial for new customers, which can help your learning experience.
3. Consult the IRS website.
The IRS has many articles and resources to help you understand federal payroll tax basics and recordkeeping requirements for businesses with employees.
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4. Check out resources from your state.
You can locate your state’s employer info at the USA.gov website, as well as the Small Business Development Center for your area.
5. Find a trusted business mentor in your field.
A business mentor can help you through the bumps of owning a business. They can also answer payroll questions—just ask. They might be able to pass on payroll advice from their personal experience of learning payroll. If you don’t have a mentor, you can find free business advice from SCORE.
6. Take a class.
The American Payroll Association (APA) offers basic payroll tools for new employers, including payroll training materials and payroll certification. The APA offers both online and traditional sit-down classes
You can find other online courses to learn payroll. Also, keep an eye out for local classes being held at community centers and libraries.
Be aware that some payroll classes are free, but others require you to pay.
How to have payroll learning success
When you begin to learn payroll, there are a few things you need to know to be successful.
- Gather your tax account numbers, including your federal EIN and state identification number if it is different.
- Both you and your employees have to pay payroll taxes. All employers should know about federal income tax, federal unemployment tax, Social Security tax, and Medicare tax. Some employers also need to know about state income tax, state unemployment tax, and local income tax. Find the rates for all applicable taxes before paying employees.
- Find out how frequently you have to deposit each payroll tax. Also, make sure you know what forms to use and where to send them.
- Learn about federal minimum wage and overtime laws. You should also brush up on the minimum wage and overtime laws for your state because they are sometimes more strict.
- Know the IRS recordkeeping requirements for payroll taxes and other employment documents.
- Determine how to handle payroll deductions for fringe benefits and wage garnishments.
- Create a free Electronic Federal Tax Payment System (EFTPS) account and familiarize yourself with it so you can make electronic federal tax payments. Your state might also have a similar electronic tax payment system.
Once you gather all the payroll information you need, it should be easier for you understand the parts of payroll and to apply your new knowledge.
Payroll doesn’t have to be a hassle. Patriot’s online payroll software makes payroll easy. Best of all, we’ll help you keep your time and money. Get a free trial today!
This article is updated from its original publication date of 12/2/2010.