Learn the “ins and outs” of doing payroll for small businesses, and how you can make it an easier, more accurate process. By FINSYNC Payroll is much more than just signing a check or making a direct deposit. Your employees’ paychecks are their lifeblood! As a small business owner, it’s important to understand all of the components of payroll. It’s not only about compensating your employees for their hard work, you must also withhold taxes, calculate deductions, and pay out benefits. Doing payroll incorrectly can have serious consequences for your business, as payroll is often subject to scrutiny by federal and state agencies. In theory, you can do payroll and track employee working hours manually, but given how complicated taxes and withholdings can be, and the many opportunities for error, it’s better to invest in payroll software for small business to make sure it’s done right. Here is a detailed breakdown of everything you need to help you run your payroll smoothly every month.
Time-Tracking ToolIf you employ hourly employees, the first thing you will need to do is accurately record how much your employees work. Time tracking is mandatory for hourly employees, for several reasons:
- Benefits tracking, if hourly employees work more than 30 hours per week
- Overtime compensation, if your business offers it
- Job costing in accounting, and for accurate customer invoicing
- Tracking hours can make it easier for you to allocate costs to different projects that your salaried employees work on
Calculating Benefits and Withholdings CorrectlyThe second and, as we stated earlier, most important aspect of payroll is the withholdings and benefit payments that you need to account for as the business owner. Taxes are at the top of this list:
- Federal income tax
- State income tax
- State unemployment tax
- Federal unemployment tax
- Social Security
- Court-ordered withholdings, such as garnishments or child support
- Other withholdings, such as repayment for payroll advances, union dues or pretax contributions to healthcare savings accounts
- Paid vacation, holiday, sick days
- Time-off related to family illness
- Workers’ insurance (health, dental, vision, life, and/or disability)
- Contributions to retirement plans (401(k))
- Profit-sharing and bonuses
Managing AccountingOnce paychecks are deposited and all taxes and withholdings are calculated correctly. Then, you have one last step to do: put the payroll information into the general ledger. If you’re working with an accountant, you will send over the payroll sheet to them, and they’ll take care of the rest. However, if you’re using FINSYNC, everything is automatically put into the general ledger. No need for manual work.
Full Financial Control with FINSYNCOne of the big benefits of using FINSYNC is the complete overview of all of your payroll expenses: salaried employees, hourly workers, and contractors. This provides better financial insight into how payroll costs are affecting your bottom line. Also what you can do to correct any bad projections. You will also have a better chance of spotting irregularities in payroll. For example, is someone logging fictitious hours, or are an employee’s overtime hours not being submitted correctly? Another helpful aspect of FINSYNC is customer support. You get a dedicated support representative that works with your business when you need help. Whether you need help setting up a new payment method or updating the marital status and tax information of an employee, your dedicated FINSYNC representative can walk you through the steps. Having a dedicated rep saves you time and frustration. That way you won’t have to re-explain the particular situation of your business every time you need help. Ready to tackle payroll management with less headache? See how FINSYNC can help you stay on top of your payroll responsibilities with a free trial.
The new IRS Tax Withholding Estimator tool can help determine whether workers and others are having the right amount of tax withheld from their paychecks. By FINSYNC Aside from accountants, few people relish the challenge of tax filing season. But this past spring many individuals and small business owners had more cause to complain than usual. They ended up with a smaller federal tax refund, or worse — having to pay more in taxes to Uncle Sam. The reason behind much of this angst was the sweeping 2017 tax overhaul that Congress passed in late December 2017. Among its many changes, the law altered how much income tax employers withhold from workers' paychecks. As a result, some of the people who got bigger paychecks in 2018 because not enough tax was being withheld ended up having to fork over more money after calculating their 2018 tax returns. This is one reason that the number of refunds issued by the IRS this year declined. Some 101.6 million refunds had gone out as of May 10, the most recent data available from the IRS. That amounts to a 1% drop from a year earlier. The average refund also declined 1.7% to $2,729.
The Balancing ActSo, what's the best way to keep this from happening to you when you file your 2019 tax return? The key is to strike the right balance between how much of your paycheck you're keeping and how much is being set aside. Small business owners and self-employed individuals, who typically will have to make quarterly tax payments to the IRS, should check to make sure they are calculating their payments properly. It’s possible that you may have to increase or reduce how much in tax you pay each quarter. That is to adjust to the changes in the tax law. Conveniently, IRS .
IRS TOOLSSmall business owners and others who receive substantial income that's not subject to withholding tax, such as dividends and capital gains, but who also draw a salary as an employee of their company, can use the IRS' new tool to calibrate their individual quarterly payments. They may find they can avoid or reduce their quarterly withholding tax payments by increasing how much tax is set aside from their paycheck, for example. Small business owners can also use the IRS' Form 1040-ES as a worksheet to pencil out their estimated tax for 2019. While every household's situation is different, most people who have only one job likely can make adjustments in how much of their pay is set aside for taxes by tweaking their IRS form W-4, which employees submit to their employer. The amount of federal income tax that's taken out of your paycheck depends on how much you earn. Also how many exemptions you list on your W-4. The IRS has taken steps to update the form for the 2019 tax year. That way it takes into account the changes in the tax law. Which eliminated personal or dependent exemptions. Prior to the tax law changes, employees would determine how many personal exemptions to take on their W-4. That would help their employer determine how much income tax to withhold. The new form allows workers to reduce the tax withheld from their paycheck if they have itemized deductions and other income adjustments, such as contributions to retirement accounts. But the new W-4 is not nearly as simple to fill out as its predecessor. It pays to use the IRS' tax withholding calculator as a guide. It generates responses that are helpful to fill in the form.
A Helpful ToolThe Tax Withholding Estimator can be used by workers, even those who are self-employed, retirees and others. It can help users determine whether they are having the right amount of tax withheld from their paychecks. For independent contractors, it calculates whether they are on track with their required quarterly estimated tax payments. Navigating the estimator requires answering a series of questions about your household income and taxes. The responses are used to come up with an estimate of how much income tax you’ll owe and how much of that you've already paid in, whether through direct payments or from tax withheld from your paychecks. The estimator walks you through steps to calculate your income and how much you've had withheld in income tax. It also allows you to factor in income from other sources, like a second job. The online worksheet lets you apply the standard deduction. For a single filer is $12,200, or itemize your deductions by factoring qualified expenses. For example, mortgage interest, charitable donations and medical expenses. The calculator also lets you work in tax credits, such as for purchasing an electric car. Once completed, the estimator shows whether your current withholding has you on track to owe, get a refund at tax time or have a zero balance. You then have the option of choosing how to adjust your W-4. Depending on whether you want to end up with nothing owed, but also no refund, or to have the IRS return the extra money you paid over the course of the year. Clicking either option generates instructions on how to fill in the W-4. It's pretty simple.
FeaturesAmong the features of the withholding estimator are tips and links to help you determine if you qualify for any tax credits or deductions. It also includes a way for workers who are self-employed but also have income from wages or other sources to determine their withholding tax. You'll need to reference information in your most recent paycheck stub, and last year's federal income tax return. If you're married or filing jointly, you'll also need the same documents from your spouse or partner.
Making AdjustmentsThe IRS recommends that workers check their tax withholding and complete a new W-4 every year. Also when their financial situation changes due to marriage, divorce, a new job, among other big life changes. To make changes to your W-4, download a copy of the form on the IRS website. Then, fill it out using the suggestions from the estimator, then submit it to your employer. If you feel you're on course for a hefty tax bill next April, remember you can also opt to make a payment or increase estimated quarterly tax payments to the IRS. If you do end up changing your W-4 now for the 2019 tax year, you'll want to recheck your withholding again in January. That's because any changes you make at midyear in your withholding may not be ideal for all of 2020. The IRS is urging workers to use the estimator to review their withholding for 2019. You can find it on the IRS website at www.IRS.gov/withholding. Doing this sooner, rather than later, is better. It will give you more opportunity to have more tax withheld every paycheck. Minimizing the likelihood that you'll be writing a big check to Uncle Sam next year. FINSYNC's integrated payroll system, which combines payments, payroll, projects, accounting, cash flow projections, cash flow management, expenses, reimbursement and time tracking, can also help small businesses come tax time. The intuitive online system can process payments and accurately comply with federal and state employee tax withholding requirements. Including full-time employees and independent contractors who require the issuance of a 1099 tax form.
By FINSYNC Managing payroll can be among the most time-consuming and complicated administrative tasks for businesses large and small. The process requires companies to comply with a bevy of federal and state employee tax withholding mandates. Including accurately calculating pay for workers who may or may not be full-time hires. While ensuring that payroll is properly funded from one pay cycle to the next. The typical small business starts out handling these functions in-house, treating payroll as a standalone segment of its back-office operations. While that may suffice early on, using FINSYNC's integrated approach to managing payroll can significantly streamline the process. Saving you time and money. Beyond that, however, using an integrated payroll system can also yield valuable insights. By automating the flow of information between payroll and accounting, cash flow management. As well as other key administrative tasks. "A payroll service takes the burden of getting money to the employees and managing tax liabilities off the business." says Dave Olsen, President of Payroll Software and Services at FINSYNC. "An integrated payroll approach helps take the ability to manage even further by linking to projects the business may be doing, time worked by employees and improved accounting reports."
Payroll Management SupportManaging employees and their payroll is one of the most costly areas for many businesses. Integrating payroll with other back-office functions and smart online tools can simplify and speed up the payroll process overall. In addition, ensuring greater accuracy. FINSYNC's system of accounting tools links a small business' payroll with their other general ledger accounts. Then, creates a virtual hub that tracks all financial transactions. It also has a built-in direct deposit function. Which automatically generates accurate tax returns and payments, and includes software for tracking work hours for employees. You can use an integrated payroll process to pay not only full-time employees but also independent contractors. The system can also adapt to suit firms that pay employees based on commission. Or on how often they deliver a product or service.
Detailed Insight Into Your Cash FlowManaging cash flow is essential to keep a business thriving. Payroll is one of the biggest recurring expenses for an employer. To effectively manage a business' cash flow needs, it makes sense to give managers a steady, real-time view of the company's outlays. Especially when the time to cut payroll checks comes around. Contrast these benefits to the standard approach small businesses often use to handle their payroll and related bookkeeping tasks. Typically meaning relying on employee timesheets that are not turned in until the end of the week to gauge hours worked. And consequently, the company's payroll for that pay period. If, like most businesses, you rely on timely invoicing to help maintain your cash flow. You have to calculate the timing of invoices and any pending expenses from a spreadsheet or other bookkeeping method to begin to get a clear picture of how prepared you are to fund your payroll needs. Integrating payroll functions with other administrative tasks easily avoids all of this. "Cash flow management becomes more effective and information for owners is more readily available in an integrated environment," Olsen says.
Improved Access to CapitalUnderstanding how your business is doing day-to-day makes it possible for entrepreneurs to manage their companies more effectively. Accessing current and reliable information on your business is much easier with a responsive, integrated system. This can also enhance your business' access to capital. As a track record of solid performance increases the likelihood of being approved for a business loan. FINSYNC's integrated payroll system combines payments, payroll projects, accounting, cash flow projections, cash flow management, expenses, reimbursement and time tracking. In conclusion, even with all of these capabilities, it can still be up to 30% more affordable. Compared to standalone services from traditional payroll companies. So, ask yourself. Can your business really afford not to use an integrated payroll system?
Streamline payroll processing, save time and money, and ensure accuracy with the support of smart online tools. By FINSYNC Setting up and processing payroll accurately can feel like a full-time job for over-stretched small business owners. It’s hard enough to make sure your employees get paid the correct amount — on time — much less pay taxes, calculate benefits and keep up with constantly changing rules and regulations. Payroll is not something small businesses can afford to get wrong. Beyond disgruntled employees, there are fines and penalties to worry about. And what if you have both W-2 and 1099 employees to pay? Managing all of the data it takes to run an accurate payroll can feel completely overwhelming. Yet many small business owners manage payroll themselves. Until fairly recently, the only alternative was to hire a full-service payroll provider, which can be cost prohibitive. Fortunately, today’s small business owners have a better option. Payroll software can offer small business owners the best of both worlds. Less expensive than a full-service payroll provider, online tools can automate the arduous bookkeeping associated with payroll — with the added bonus of live support. Relying on intuitive payroll software can save you time, money and quite possibly your sanity.
Save TimeSetting up payroll can be daunting. There’s a lot more to it than simply determining how much each of your employees should be paid. You need to factor in benefits, make sure the appropriate amount of taxes are withheld and meet compliance regulations that vary from state to state. When you set up your payroll within an accounting platform like FINSYNC, which syncs up all of your small business finances in one place, taxes are calculated automatically. This automated bookkeeping not only saves you a significant amount of time, it can also dramatically improve the accuracy of your payroll. Intuitive payroll software can streamline your efforts even further by integrating time tracking and accountability into your projects. Mobile-enabled time tracking that’s synced up to your payroll can make it simple to calcuate accurate payments. Geo-fencing and IP tracking provide visibility so you know the hours submitted were actually at the job site. This is especially true if you work with contractors in addition to full-time employees, both of whom can use the time-tracking tool. Integrated payroll software makes it seamless to pay both W-2 and 1099 employees on the same cycle.
Save MoneyWhen you don’t have the budget to hire a full-service payroll company, innovative software is a logical alternative to tackling the task yourself — especially when you consider the amount of time and resources the DIY approach requires. Integrated payroll software like FINSYNC can cost 20 to 30 percent less than standalone services like ADP or Paychex, and has the benefit of being synced up with your small business finances on a single dashboard. When shopping around for payroll software, be mindful of add-on pricing. Some companies charge extra for capabilities like time tracking, integrated expense claims management and extra administrative users.
Save Your SanityWhen it comes to avoiding fines and penalties, peace of mind is invaluable. You’ve got a lot on your plate already — payroll shouldn’t add to the stress of running your small business. Online payroll tools can help you avoid miscalculations and missed deadlines. They can also help you keep up with changing regulations without any extra effort (or stress) on your part. Automatic updates ensure that you remain compliant in the state in which you operate, even when tax tables are updated. Wondering if your contractor should actually be classified as an employee? Have a question about calculating benefits? Payroll can be complicated on a lot of different levels. The best payroll software is backed by live support in the form of a dedicated, U.S.-based representative that you know by name. Let’s not forget about the importance of paying your employees on time, every time. When you’re staring down a million different deadlines, payroll is something that simply can’t wait. Well-designed payroll software can take the crucial task of paying your employees off of your plate. Relying on intuitive payroll software is simply a smarter way to run your small business. Save time and money so you can concentrate your efforts on growing your business.
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