You started your own business because you have a passion for something. We’re betting that passion wasn’t for executing and managing payroll. Sitting down to pay your employees for the first time can be overwhelming. W-4 deductions, withholdings for income taxes, Social Security, Medicare. And even if you figure out the right amount, where do you send this money to?
The good news is that not only can all this be accomplished, but it can be done quickly and easily with the right instructions. And that’s exactly what I am going to provide for you here.
First, you’re going to need an Employer Identification Number (EIN). You can read more about that here. To obtain this, you will need to complete an SS-4 Form with the Internal Revenue Service (IRS).
Next, you will need to register with the IRS for the future payment of your payroll taxes. After withholding tax deposits from your employee, you can deposit them electronically. Sign up for the Electronic Federal Tax Payment System (EFTPS) to be able to do this.
After you are registered with the IRS, register with your State’s Department of Revenue. Each state will differ as to when they want you to pay your employees’ income taxes.
Each time you hire a new employee, you will need to register him or her with the state. This is done to track those who owe money for child support or other debts. Their wages can be withheld by the state.
You will be required to sign up for federal unemployment insurance, and you may be required to do the same through your state. As an employer, you will need to pay federal unemployment insurance. If the employee should lose his or her job, she may be able to claim unemployment benefits.
Some states, but not all, mandate you pay state unemployment taxes (SUTA), in addition to what you pay federally. The amount of which also varies by state. To determine if and how much you owe, register with your state’s labor department.
Look up your state’s worker’s compensation agency and register. This is who will pay employees who are injured or have become ill due to work. Though the payments will come from the agency, you will still pay into the fund.
Start a New Bank Account
Open an account with a bank of your choice for the sole purpose of paying payroll and payroll taxes. This is an easy step to make this process simpler. With funds going in and out of your business, you can manage one account for one use. Ensure to add authorizations so the right entities can withdraw the funds.
Employee Hiring and Pay Schedule
As your business grows and you take on additional employees, per state and federal laws, you will need to do the following with each one:
Verify employment eligibility by having them fill out a Form I-9. Some states will allow you to E-Verify them if you are enrolled in that system.
Have them either complete either a Form W-4 (for employees) or Form W-9.
Lastly, obtain your new employee’s bank account and routing number. This can also be done by getting a blank/voided check from them.
Though it may seem small, you will also have to determine how frequently you pay your employees: weekly, bi-weekly, semi-monthly, monthly, or even, in some cases, yearly.
With the right paystub generator, you can execute your payroll (accurately) in less than two minutes. Things like income taxes, unemployment insurance, and Federal and State withholdings can be calculated and totaled for you. If you can enter into the information, the paystub generator can do the rest.
Here’s what you information you’ll need to generate pay stubs in 123PayStubs:
Wages for your employee
W-4 or W-9 Withholdings
Location (to establish state taxes, and sometimes taxes owed may differ zip code).
Deductions for healthcare plans and retirement plans (if applicable)
Reimbursements (if applicable)
123PayStubs Offers You a Solution
123PayStubs is a payroll solution for you. Not only can your pay stubs be generated for you, but they can be completed on a phone or a computer and emailed directly to you and your employees.
Making mistakes have real-life financial consequences for both you and your employees. Incorrect fillings and late payments can be avoided entirely by our accurate paystub generator and reminder services.
When using 123PayStubs, you will receive step-by-step instructions on how to proceed. With all the information you entered, 123PayStubs will create pay stubs and will facilitate payroll tax filing from within the product.