Starting your own business can be as exciting as it is overwhelming. It’s never as simple as launching a website and watching the orders come in. In fact, there are so many crucial components of your business that must be in place before you can even begin.
Some of the most important of these are complying with government regulations. These apply at the federal, state, and sometimes local levels and apply to all types of businesses. The first thing you don’t want to do is skip a critical step and find yourself on the wrong side of the law.
One of the items you should tackle first is payroll, whether you have employees yet or not. Since this aspect of your business ties directly to the government it’s best to be certain that you’re in total compliance to save yourself a massive headache down the line. And remember, when in doubt always contact a local accountant or tax attorney for advice.
Start With the Government
The government is not going to make it easy, but it’s vital that you follow the steps to be fully in compliance with their payroll regulations. The first step is to establish your Employer Identification Number, or EIN. This number will be used as your identifier when communicating with the federal government regarding payroll issues. Luckily you can apply online. You’ll also need to check to see if you need to do the same on a state and local level.
What Types of Employees Will You Have?
When it comes to hiring your staff you’ll need to decide if they’ll be independent contractors or employees. There is a big difference between the two. An independent contractor performs work for you but is not an employee. You pay them an agreed upon salary and they are responsible for their own tax withholdings. An employee is paid by you and you are responsible for tax withholdings, Medicare, and other tax liabilities. It’s up to you to decide which will work best for your company.
Decide on a Payroll Timeline
Your employees count on their paychecks just as much as you count on incoming revenue from customers so it’s important to implement a payroll timeline that is suitable for all parties. The general payroll term is bi-weekly but some employers pay monthly. In some cases, especially with contract employees, payment might be made when a specific project is finished.
If you’ve ever been an employee yourself you know that monthly paychecks aren’t always ideal. If you’re able to make it work within your business, bi-weekly paychecks can go a long way toward keeping your employees happy.
In-House Payroll Service or Outsourced?
If you’re one that wears all the hats in the office then you know how much work goes into even the smallest business. Adding payroll to that mix can leave you feeling burned out. While many business owners simply assume the task falls under their umbrella there are many more options for payroll services.
Outsourced payroll services can save you a great deal of time that could be devoted to other aspects of your business. Hiring a payroll service means that you have payroll professionals on your side. They can ensure that every aspect of your payroll is accurate and completed according to your parameters. Remember though that you are still responsible for paying all payroll taxes that fall under federal, state, and local law. Regardless of that having a payroll service working with you can help eliminate errors and ensure that you’re always tax compliant.
Running a business is hard but the legal aspects of this task are the ones that you need to pay a great deal of attention to, especially payroll. Many businesses have been shut down before they can even begin to make a profit because they’ve neglected an important legal issue or have failed to learn the laws and follow them exactly. If you’re ever unsure about any legal portion of your business be sure to get in touch with professionals who can walk you through these tasks or hire them to take care of them for you. In the end, the success of your business might depend on it.