A Guide to Preparing Payroll and Taxes Yourself
Running a small business is usually more challenging because of the limited workforce. As a small business owner, you will be required to focus your time, energy, and talent on different tasks of the business. Since you are operating on a small scale, you might not have the required financial resources to hire an in-house team. As a small business owner, you should be prepared to take care of most of your business tasks yourself, even if they are challenging. The two important things that you should learn how to do are preparation of taxes and payroll for your business. If you decide to do payroll and taxes yourself, here are the most important things to note.
Before you start preparing your taxes and payroll, you need to have an Employer Identification Number (EIN). Having an EIN is a way of informing the IRS that your business exists. With an EIN, the Federal government will be able to distinguish your business as a tax-paying entity. If you want to know the process of applying for EIN, click here for more info. now. The next step is understanding if your workers are either independent contractors or employees. W-4 are usually meant for employees. In the case of independent contractors, they will have to fill W-9 forms.
One way to simplify the payroll and tax preparation process is by creating a payment schedule. The most important dates that must appear in your payment schedule are employee pay dates, tax payment due dates, and tax filing dates. Always have in mind the state regulations when setting the dates. Always ensure that the money required is available on the two important dates. It is common for small business owners to flaunt tax laws and guidelines as set by the IRS since it is a sophisticated process. Withholding the correct amount will ensure that you don’t get into problems with the IRS. IRS Withholding Calculator or paycheck calculator can help you determine the right amount to withhold as taxes.
Record keeping is a crucial task for every business owner to boost efficiency. The most suitable technique for keeping your tax records is creating a pay stub. On the homepage of this website, you will learn a few tips for making a pay stub. Besides, you should have all your tax forms filed. The best way to avoid fines is paying the taxes on time.
A majority of business owners outsource payroll services to avoid doing the challenging task. Hiring payroll services will ensure that you do not make any mistake in the process and comply with all the IRS laws and guidelines. With the help of these steps, you will not have to worry about hiring a professional to do your taxes and payroll.