Whether you are a beginner or a payroll expert, there are specific steps you should take to ensure that you are doing it the right way. For starters, you will want to ensure you have all your records in order and are ready to file taxes. You will also want to ensure you have set up a schedule for your payroll.
Calculate the total hours worked during a given pay period
Calculating hours worked is essential whether you are an hourly employee or a freelancer. Aside from time, there are other factors like overtime, blended pay rates, and more. There are many programs and software solutions to help you calculate your hours. However, a manual calculation can be tedious for a single person.
The easiest way to calculate the number of hours you have worked in a given period is by averaging the number of days you worked. For example, if you worked 52 weeks a year, you would get an average of 520 hours. You can also multiply this number by your hourly rate to get the hours you have worked per week.
Another way to calculate the number of hours you have spent on a given task is using a timecard calculator. This can be a physical device or a software solution from ProService Hawaii. You can also use an excel spreadsheet to calculate your work hours. It is always important to record times correctly, so it is best to use a software solution that will help you ensure you input the correct start and end times.
Using the right software solution for your job can help you calculate your hours accurately. However, if you are not using a software solution, checking the math with a timecard calculator is an excellent idea to ensure you have all the essential data.
Getting your hands on the correct paperwork and completing the proper forms is the key to success. Getting the correct tax filing information can be a pain in the arse, but the reward of knowledge and confidence is well worth the time and effort. You will also be satisfied knowing you are on your way to becoming a tax-paying tax-filing machine. Thankfully, there are companies out there that will do the heavy lifting for you. Whether you are a business owner or an employee, it pays to know the ins and outs of your tax situation and how to handle your taxes. If you haven’t already, consider a tax professional to ensure you are not missing out on the opportunity to raise your fair share of federal and state money.
You must pay state, federal, and local taxes if you have a business. Therefore, it is essential to know the proper tax filing system to rake in the correct tax revenue and avoid fines or audits down the road. It would help if you also considered using an IRS-approved tax preparation service because this is a surefire way to prevent a costly mistake. A good tax professional will also show you how to handle your taxes and ensure your tax paperwork is in order.
Set up a payroll schedule
Whether a small business owner or an employee, you need to set up a payroll schedule. This can help you manage your paychecks and protect your business bank account from becoming your line of credit.
There are four payroll schedules: biweekly, semi-monthly, monthly, and weekly. Each has its advantages and disadvantages. Choosing the right one depends on your business needs and specific state regulations.
Biweekly payroll is a trendy choice for most small businesses. This type of schedule pays employees every two weeks on a specific weekday. This can simplify payroll processing and result in fewer outsourced payroll services fees. However, this schedule requires half as much time to process as a weekly schedule.
Semi-monthly payroll is the next most common. This type of schedule pays employees twice a month on a fixed schedule. However, it requires a little more planning and verification. First, you must set the start and end dates for each pay period and verify that the schedule applies to all your employees.
Monthly payroll is the last of the four common types of payroll schedules. This schedule pays employees on a fixed date every month. It also has the lowest processing costs. However, it can be cumbersome for budgeting purposes.
Keep payroll records
Keeping payroll records is a critical aspect of compliance. These records document all accounting and tax documents about paying employees. They include employee names, addresses, Social Security numbers, occupations, wages, compensation, and more. Businesses need to keep payroll records on file to avoid penalties.
Several federal and state laws require employers to keep certain records. For example, the IRS and the Fair Labor Standards Act (FLSA) require employers to retain certain payroll records for three years. In addition, some states and insurance companies may have more extended retention periods. Some documents should be kept for at least six years.
Employers should also keep copies of time cards. These records show the total hours worked and the hours of overtime pay. A payment agreement and payment schedule should also be held.
Employers should also keep the total amounts withheld for taxes and compensation. This includes non-taxable wages such as health benefits and retirement benefits.
Employers should also keep the total amount of withheld taxes and compensation for four years. This allows employers to stay compliant.
Other payroll documents should be kept for a more extended period. Some experts recommend keeping certain records for up to seven years. Keeping records in an electronic format is also helpful. Electronic documents are less expensive to store and easier to maintain.