A Step-By-Step Guide on How to Prepare Payroll and Taxes Yourself
Running a small business is usually more challenging because of the limited workforce. As a small business owner, you need to know how to share your focus, energy, and time on different crucial aspects 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. It, therefore, means that you will be required to take care of all the tasks yourself irrespective of the degree of expertise required. The two important things that you should learn how to do are preparation of taxes and payroll for your business. Read on to learn how you can handle taxes and payroll services for your small business.
As a small business owner, before you start preparing taxes and payroll for your team, you should apply for an Employer Identification Number. Applying for an Employer Identification Number (EIN) is one way of information the Internal Revenue Service (IRS) about the existence of your business. It is a way of protecting your business against the Federal Government that requires all businesses to be tax-compliant. In this website, you will learn about the process of applying for an Employer Identification Number. Next, you need to inform the IRS if your workers are either employees or independent contractors. For your employees, you will need to fill W-4 forms. On the other hand, if the workers are independent contractors, they will need to fill W-9 forms.
Having a payment schedule will make the process of doing taxes and payroll much easier. Some of the crucial dates that you should note are employee pay dates, tax due dates, and tax filing dates. Always have in mind the state regulations when setting the dates. After setting the payment dates, you should ensure that you have the money need to pay all your workers on the set date. Since the preparation of taxes is a sensitive matter, most businesses usually find themselves on the wrong side of the IRS laws. One of the steps to take is withholding the right amount during payroll. IRS Withholding Calculator or paycheck calculator can help you determine the right amount to withhold as taxes.
Keeping tax records is encouraged if you want to solve issues with the IRS fast. The best way to keep your tax records is by making 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. Late payment usually attracts huge penalties that might cripple your business financially.
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. As a small business owner, if you want to do taxes and payroll services, you should follow these useful steps.