Payroll for Small Businesses
Effective payroll management is key to success in the early stages of your business — and as your business grows. When you start a business, you know at some point you’ll need to pay your employees, including yourself. But you might not know everything small business payroll entails, especially if you’ve been an employee in your previous work life. Your paycheck would only have shown you the front-facing side of payroll. Any employee certainly knows that taxes are withheld from their paychecks. So are Social Security contributions and pretax benefits such as any 401(k) contributions they’ve chosen.
You’ll want to know the entire payroll picture as a small business owner. Behind the scenes, small business payroll interfaces with several important players. The leading ones are state and Federal agencies with multiple laws and regulations, such as the Internal Revenue Service (IRS) and the Department of Labor (DOL). Payroll also interfaces with a number of small business activities, such as human resource policies, employee benefits, and corporate compliance.
It’s easy to miss the spectrum of payroll activities when you start a business. Frankly, most small business owners are focused on other aspects of their startup. If you’re like many entrepreneurs, this business represents a dream for you — and independence from working for someone else. Running a business involves juggling numerous priorities, including strategy, supplier management, pricing, hiring, marketing, and more — all of which may seem to take higher-priority than payroll.
But payroll is crucial for several reasons:
- Getting paid regularly and on time is key to employee satisfaction.
- You can face stiff penalties (fines, interest, and possibly legal action) for incorrectly handling payroll.
- You need to make the right payroll choices and know what choices exist.
- You want to make sure your pay is accurate too!
Discover all you need to know about payroll management as a small business owner here in our comprehensive guide to payroll. Let’s start with an overview of the best payroll practices for small businesses.