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The Complete Payroll Blog

How to Set Up a Small Business Payroll

Posted by Complete Payroll | Jul 5, 2017 12:46:18 PM

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You're just trying to pay your people, right? Setting up payroll for a small business is pretty straightforward in theory (and most of the time in practice as well), but it does require a few important steps that must be understood.

Here's how to set-up a small business payroll...

1. Get your EIN (and other IDS, if necessary).

First, you have to obtain your Employer Identification Number (EIN) and state/local ID, if necessary. Then you'll need to handle the paperwork for your employees. Here it's important to know the difference between employees and independent contractors, but we've explained that for you here.

2. Pick a pay frequency.

Next, decide on a specific payment period. This can be weekly, bi-weekly, monthly, semi-monthly, quarterly, etc. First off, look up the pay frequency laws in your state to make sure there aren't specific wage payment requirements for the workers you employ. Secondly, realize if you're going to outsource to a payroll processing vendor, they legally aren't allowed to advise you on establishing your pay frequency - no matter how much they'd like to or how qualified they are. However, here's another article about setting up pay frequency you'll probably find helpful.

3. Prepare to manage it.

Make sure you have the necessary information for tracking employee work hours, managing part-time payments and making deductions for health plan premiums and other business deductibles. Do you offer a 401-K or something else that might flow through payroll? Speaking with a payroll processing company or your CPA would be the best way to make sure you're not forgetting anything.

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4. Research the right payroll system for you.

Full disclosure... We are a payroll company, and an awfully good one at that. So we'd love it if you considered us to set up and process your payroll for you...

 ... But we also realize not all relationships are meant to be. Your other options to consider include another payroll company, a CPA or doing your own payroll in-house. You should review all options and make the right decision for your business.

Don't forget...

As an employer, you are responsible for filing tax documents, recordkeeping and making the necessary payments to support payroll taxes for your employees. That could make things complicated and is another reason why many small businesses choose to outsoure their payroll.

Another advantage to outsourced payroll is being able to largely avoid all the tax hassles. There are a wide variety of federal and state tax rules you have to follow, and you'll save on time and aggravation if you can outsource tax management.

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If you're hiring an employee, or think you might be soon, check out our comprehensive resource page, Employee Onboarding - A Complete Guide. This is a handy, tightly-packaged outline that presents all the critical hiring and onboarding elements in simple, chronological order. 

Topics: Employees, Payroll

Written by Complete Payroll

We do payroll, HR, timekeeping and more for employers all over the country from a small, rural town in Upstate New York. And we're constantly publishing articles and other resources to help business owners, HR managers or anyone that helps manage a workforce. Welcome to Payroll Country!

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The materials and information available at this website and included in this blog are for informational purposes only, are not intended for the purpose of providing legal advice, and may not be relied upon as legal advice.  The employees of Complete Payroll are not licensed attorneys. This information and all of the information contained on this website are provided pursuant to and in compliance with federal and state statutes. It does not encompass other regulations that may exist, including, but not limited to, local ordinances. Complete Payroll makes no representations as to the accuracy, completeness, currentness, suitability, or validity of the information on this website and does not adopt any information contained on this website as its own. All information is provided on an as-is basis.  Please consult an attorney to obtain advice with respect to any particular question or issue.