355: Simplifying Paychecks Taxes And Payroll Compliance Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Freelancer, Accountant, Bookkeeper, Virtual Assistant, Owner
- Financial Adventure, LLC
- 6 days ago
- 9 min read
355: Simplifying Paychecks Taxes And Payroll Compliance Whether You Are Starting A Business Or Side Hustle, A Solopreneur, Entrepreneur, Freelancer, Accountant, Bookkeeper, Virtual Assistant, Business Owner, Or Self-Employed
Payroll might not be the most glamorous topic, but it’s a large part of your business if you have employees. If you don’t have any employees yet, understanding how to add payroll to your business will be extremely important. When you have employees, you need to create a process of paying your employees, ensuring they receive their money on time and that you, as the employer, follow through with and fulfill all your obligations. In today’s podcast episode, I walk you through some of the most important aspects of processing payroll for your business. You need to understand these topics, whether you are going to process your own payroll or you are going to outsource your payroll and hire someone to do your payroll for you. Whether you are starting a business or side hustle, you’re a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, there’s a lot to know about payroll, but once you have a general understanding, it is pretty simple to understand…
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Show Notes:
Payroll might not be the most glamorous topic, but it’s a large part of your business if you have employees. If you don’t have any employees yet, understanding how to add payroll to your business will be extremely important. When you have employees, you need to create a process of paying your employees, ensuring they receive their money on time and that you, as the employer, follow through with and fulfill all your obligations. In today’s podcast episode, I walk you through some of the most important aspects of processing payroll for your business. You need to understand these topics, whether you are going to process your own payroll or you are going to outsource your payroll and hire someone to do your payroll for you. Whether you are starting a business or side hustle, you’re a self-employed individual, a solopreneur, entrepreneur, mompreneur, freelancer, small business owner, a remote, virtual, online, or in-house bookkeeper, or a virtual assistant or VA, there’s a lot to know about payroll, but once you have a general understanding, it is pretty simple to understand…
Welcome Back…Understanding payroll doesn’t have to be complicated, but I do want you to realize that payroll is totally different from other aspects of the bookkeeping you do for your business. When you add an employee to your business and start paying them, you need to have a good understanding of how payroll works within your business. Knowing the responsibilities payroll brings to your business is an essential part of being a business owner because no matter how you have your payroll processed, you, as the business owner, are ultimately responsible for your payroll obligations.
Let’s begin with what you need to do when you are ready to hire your first employee. You need to make sure you have your Federal and State ID numbers set up, and you’ll need to get the proper information from your employee. You will have your employee fill out a W4 form and an I9 form to get this relevant information and ensure they are eligible to work for you. These forms will dictate how much you should be withholding for payroll taxes as well. You may have other state or local requirements that need to be met, so make sure you check with your state for any additional requirements. Make sure you are up to date on any minimum wage and overtime regulations by checking into The Fair Labor Standards Act and setting your rate of pay for your employees as well as any benefits you may be offering to them.
Before you start paying your employees, you will need to set up a pay schedule. Will you be paying your employees on a weekly, bi-weekly, semi-monthly, or monthly basis? Once you have this established, you will follow this schedule so that your employees are paid on a timely basis. You will start by calculating your employee’s gross payroll. This is done by taking the number of hours they have worked and multiplying these hours by their hourly rate. When you calculate your employee's net pay, you will start with their gross pay and then take into consideration any federal, state, and local payroll taxes that need to be deducted. You will also deduct Social Security and Medicare taxes. These taxes will be paid by both your employee and you as the employer. If you have any additional deductions, you will take these into consideration as well when calculating your employee's net pay.
If you’re an accountant or high-stress professional, you want to start enjoying your life more, both at work and at home. You’ve likely built a successful career, but at what cost? The problem is you’re so buried in deadlines and to-do lists, there’s no time or energy left for the things that really matter. You’re great at managing clients, deadlines, and numbers, but your own stress, time, and well-being, well, they always seem to come last. The constant pressure leads to burnout, guilt, and feeling like no matter how much you do, it’s never enough. I see this all the time. As a CPA with over 20 years of experience and a Certified Coach, I’ve helped high-achieving professionals like you go from stress and burnout to a more integrated and balanced lifestyle using The RE*INVENTION™ Process. This process helps you reduce stress, reclaim your time, and finally build a healthier, happier, more balanced lifestyle without sacrificing your success. The truth is, stress doesn’t go away on its own, and eventually, the cost isn’t just exhaustion; it’s your health, your relationships, and your love for the work you once enjoyed. If you’re ready to build a life you don’t need a vacation from, it’s easy to get started. First, schedule your Complimentary Stress Audit & Clarity Session, where in just one session, I’ll help you pinpoint what’s really draining your time and energy, create a personalized action plan to help you simplify your life, reclaim your time, and increase your productivity so that you start living with more energy, focus, and freedom. You don’t have to keep doing this alone. I can help you customize a plan to stop the overwhelm and start enjoying your life again. Go to www.FinancialAdventure.com, click on the Work With Me button, and book your free session today. Let this be the moment you stop just surviving and start living with more control and finally enjoy a more integrated and balanced lifestyle again. In the meantime, check out all the other resources and solutions on my website that you can immediately apply to your life so you can stop being stressed out and feeling like you're never doing enough, and instead breathe a sigh of relief at the end of the day, knowing you've accomplished enough and can enjoy your life more.
Now that you’ve deducted payroll taxes from your employee’s paycheck, you need to make sure you are remitting these taxes on time. Payroll taxes are what most business owners struggle with. Any payroll taxes you withhold from your employees will need to be paid to the appropriate agency and will need to be paid on time. There are specific due dates that you need to follow when you are paying your payroll taxes, and they are based on the total payroll taxes you need to pay. Not only will you remit the payroll taxes withheld from your employee’s paychecks, but you will also need to remit your employer’s portion of the Social Security and Medicare taxes. Both the employer’s taxes and the employee’s taxes will need to be paid according to your payroll tax deposit schedule.
You, as a business owner, will have your employer’s portion of the Social Security and Medicare payroll taxes that are accumulated with each payroll you process. Additional employer taxes also include Federal and State Unemployment taxes as well. These taxes are collected to fund unemployment insurance and are based on your employee’s gross payroll. These additional employer payroll taxes are generally due at the end of each quarter and may have reporting requirements depending on your state.
At the end of each quarter, you will be required to file the necessary quarterly reports needed for your business. The Federal 941 form reconciles the amount of Social Security, Medicare, and other taxes paid with the total tax due. You will more than likely need to file a similar report with your state for any state and/or local income taxes withheld as well. These reports will let you know if you under or overpaid any of your payroll taxes.
At the end of each year, you are required to file an annual Federal 940 report, which reconciles your Federal Unemployment tax paid with the total tax due. You will likely have a state report that will reconcile your yearly state and local income taxes. You will also need to issue a W2 for each employee, which will show how much you paid your employee as well as how much was withheld from their paychecks for taxes and any other deductions. These W2 forms will be sent to the Social Security Administration, your state, and your employees. All of your payroll reporting is done on a calendar year basis, and everything is reset at the beginning of the next year.
Adding payroll to your business is a big responsibility, and you want to make sure you are doing it right. If you are thinking that you need additional help with your payroll processing, make sure you get the help you need. Most business owners do not process payroll entirely on their own. They utilize a payroll solution to help keep them in compliance, ensure their payroll is calculated correctly, and that their employees and taxes are paid on time. Another benefit of using a payroll solution is offering direct deposit to your employees. Most employees utilize this option, and some may even ask for you to provide it to them as an additional benefit.
Understanding how payroll works in your business isn’t just about meeting legal requirements; it’s also about taking care of your employees. If you are unable to do this, you’ll find that your employee morale may plummet, and they may leave you for a more reliable employer. When you understand how your payroll works, as well as the liabilities it creates in your business, you won’t find yourself struggling with cash flow issues. By having a consistent payroll schedule and knowing when and how much you need to pay for your payroll liabilities, you'll be able to forecast your expenses and improve your financial stability. Payroll can be stressful for business owners, but it is my goal to help you eliminate stress whenever possible so that you can continue to enjoy doing what you love most in your business.
If you need help with getting a better understanding of how payroll is impacting your business or if you are unsure of what you need to do next in your business regarding payroll or other areas that are causing you stress and overwhelm, I’m here to help.
And, you know I’m going to ask…what’s at least one thing you will take away from this episode that will help your business succeed and grow your bottom line? If you want accountability or support, visit www.FinancialAdventure.com. You’ll find links to join our private Facebook community, connect with me on LinkedIn, and discover more free resources to help you reduce stress, boost productivity, and build a business and life you truly enjoy. I’ll see you there.
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