If you are a Christian woman in business and have employees in your business (as opposed to independent contractors), knowing about payroll management is one of the most important parts of doing business. Even though this is a basic components of business accounting, it can be surprisingly complex. There are a lot of different parts of the accounting process to keep track of in business. If you have an accountant or manage your own payroll, here are seven things you should keep in mind about managing your payroll.
If you’re paying your employees by the hour, payroll management begins with having a good system for tracking time worked by each employee. Have a reliable system to accurately log in hours. If you are working with a virtual employee, have that person provide you with her hours tracking sheet each month showing what has bene accomplish during the payment time period. This is essential for accurate payroll management
Taxes and Withholding
As an employer, you are responsible for withholding the appropriate amount of taxes from your employee checks. That includes but isn’t limited to a 6.2% social security withholding, a 1.45% withholding for Medicare, income tax withholding and more. You also need to put in your employer tax matches, including the same amount in Medicare and social security, as well as unemployment taxes and know when to submit the paperwork and money to the government.
Benefits and Deductions
Employee benefits like dental plans and health insurance plans often come with a premium payment that the employee needs to pay. Your company will usually pick up part of the tab and you would have the employee put in a certain amount also. The necessary premium portion from the employee will need to be deducted from their paycheck in the form of deductions.
Tracking Payment Due Dates
Another somewhat confusing aspect of payroll management is tracking when you need to pay various dues, taxes and fees. Different government organizations need to be paid at different times. Furthermore, the date of your company’s fiscal year end can shift these dates around. You need to develop a system for tracking when you need to pay what if you are doing your own payments. Record these payment dates on your calendar as being late on paying your fees can result in penalties.
How to Actually Pay Employees
How to get money to your employee is another important payroll management component. Options for doing this include setting up direct deposits, printing and mailing checks, or even having the employee pick the check up in person. You also need to print pay stubs which detail your employees’ compensation, withholdings and deductions. These are important for your employees’ records. They’re also essential records in case a dispute ever arises.
You need to make sure you get tax forms from your employees every year. These forms need to be completely filled out by all employees and postmarked by January 31st. These forms include 1099s for contractors and W-2s for employees.
Maintaining Your Accounting Records
The amount of hours worked and the salary pay owed must be balanced against the amount of money actually paid out. Balancing should be done both quarterly and annually. Balancing your books helps avoid accounting mistakes and oversight.
As you can tell, managing employee payroll can be quite a complex endeavor. Having someone experienced in house or having a trustworthy accounting firm work with you can make the whole payroll process much easier. The most complicated part is getting started. Once your payroll systems are in place, keeping things running is relatively simple. Even if you have an outside professional do your payroll records as a responsible women in business, it is good to have at least a basic understanding of how this process works.