Helpful Payroll Tips for Small Business Owners

For business owners, proper handling of payroll is important.

This will prevent them from overpaying their employees or contractors. It will also ensure them that they are staying compliant with the IRS when it comes to payroll taxes.

The following are helpful payroll tips for small business owners that can also be applied to any enterprise:

[columns] [span6]

• Outsourcing your payroll

Let the experts do the job for you. Unless you have an accounting background, you probably don’t know most of the procedures involved. By working with a payroll professional, you are also able to comply with all the federal, state, and local rules. Take note that there are substantial penalties when you file payroll tax returns late or if you did not provide enough withholding deposits when they are due.

• Get an Employer Identification Number (EIN)

For payroll purposes,you should get an Employer Identification Number (EIN). If you are also operating a corporation or partnership, you should already have an EIN. If you have not, then, it’s time to obtain one from the IRS.

• Ensure to classify your employees/contractors correctly

When doing payroll and covering your payroll taxes, make sure that you classify all workers on your team correctly.Check if you have 1099 independent contractors working for you or W-2 employees on staff whom you pay benefits such as health insurance.

[/span6][span6]

• Try to offer fringe benefits in order to lessen your taxes

Whenever you give a raise to a certain employee, you are also increasing your payroll and payroll tax bill. One option that you can implement is to offer fringe benefits instead such as dental and vision insurance, a company smartphone, and a retirement plan. Fringe benefits are tax-free in most cases.

• Have an up-to-date profit and loss statement

A profit and loss statement helps small business owners to have a look at how much money is coming in and out of the business. This is helpful in determining your payroll taxes, as it can help you find ways to reduce some business expenses as well.

• Try to have a second business bank account for payroll purposes

A second business bank account for payroll and payroll taxes will guarantee that you have adequate funds on hand separate from your regular business funds.

[/span6][/columns]