We at B&J Bookkeeping are experts in performing bookkeeping and payroll services for small business. While an owner’s time should be focused on running the business, payroll is also a vital part of it. Payroll must be completed both on time and accurately to satisfy the needs of its workers. It is also vital for payroll to meet state and federal government regulations. So what seems to be a simple task of cutting checks every pay period can be far more complex and hazardous. And as a small business develops, its payroll related needs change. In order to best handle the task, here are our 6 tips to choosing a small business payroll service.
1. Payroll Tax
Most salaried full-time employees have to pay income tax to the federal government. The tax is often withheld on their paycheck and automatically given to the fed. This is done to avoid having too little or too much tax withheld from their pay so they don’t get hit with one bulk payment at tax time. Many small businesses ask employees to fill out Form W-4 (Employee’s Withholding Allowance Certificate) in order to avoid this.
To calculate how much an employee should have withheld, you may use the IRS withholding calculator. Items you will need in order to use it include:
- Recent pay stubs
- Most recent tax return
- Estimation of values
- Filing status (single, married, etc.)
- Number of dependents
- Amount of adjustments
- Number of credits
- Any wage income and withholding
- and other items.
2. Garnishment of Wages
There are many reasons one or more of your employees may have part of their wages garnished. They include items such as child support, tax payments, various court orders, etc. These situations may become complex because they vary from situation to situation. Businesses are required to comply with any wage garnishment orders, which further complicates payroll. Garnishments must calculated and the correct amounts must be sent to each recipient. Some wage garnishments are even more complex than a flat fee or percentage. Some garnishments can include a percentage of pay, along with a fixed amount, and a cap at certain amounts. This can be confusing, since many employees have varying paychecks due to items like commissions or hours worked.
3. Small Business Payroll Options
You may have your preferred method of payment but that of your employees may vary. A direct deposit system via ACH is common but not always available to all. For example, some employees may not have a checking account in which to send a direct deposit. There is also the issue of printed checks vs. digital and paper managed payroll vs. electronic. Some small businesses may have half of workers prefer one way and the other half prefer another. This is why having a balanced system is an important part of a small business payroll service.
4. Different Pay for Different Employees
Some employees may get the same pay and same pay check, week in and week out. However, others may have varying pay. For example, hourly employees will be paid by the number of hours worked. Some of these employees may perform secondary tasks as needed which pay different from the primary. The same goes for employees who are paid via commission. They may have a flat salary in addition to a percentage of their sales, completed tasks, or other criteria. This does not even factor in items such as raises or over time pay.
5. Employee Benefits
Do you offer benefits such as a retirement account or health insurance? In the case of retirement accounts, many businesses offer a sort of matching program. Employees who take advantage may choose to put a percentage of their pay into this account. They may also change the amount as they please. In the case of health insurance, businesses often charge their employee for a percentage of the premium. As these premiums rise (or perhaps someday fall), so too does the amount removed from their paycheck.
6. State Tax
Texas has no state income tax. This is not currently true in 43 other states. If you hire offsite employees on a full or part time basis, they may live in one of these states. Payroll for them must be adjusted accordingly. The task can become even more burdensome if you have multiple employees in multiple states.
Houston Payroll Services for Small Business
If you live in Houston and need bookkeeping and payroll services to help keep up with your expenses, feel free to contact us for to learn more on how we can help.