A Guide to Preparing Payroll and Taxes Yourself
It is usually more stressful to manage a small business because of the limited workforce. If you own a small business, you will be the one to take care of all the tasks from administrative to marketing, which can be challenging. Hiring a team to handle the activities might not be financially sustainable, especially at the beginning stages. It, therefore, means that you will be required to take care of all the tasks yourself irrespective of the degree of expertise required. One of the challenges tasks associated with running a business is the preparation of payroll and taxes. Read on to learn how you can handle taxes and payroll services for your small business.
The first step to doing taxes and payroll yourself is having an Employer Identification Number (EIN) for your business. Applying for an Employer Identification Number (EIN) is one way of information the Internal Revenue Service (IRS) about the existence of your business. With an EIN, the Federal government will be able to distinguish your business as a tax-paying entity. read more here on how to apply for EIN. Once you get the EIN, you should clarify if your workers are employees or independent contractors. For your employees, you will need to fill W-4 forms. In the case of independent contractors, they will have to fill W-9 forms.
The next step is creating a payment schedule. Some of the crucial dates that you should note are employee pay dates, tax due dates, and tax filing dates. The dates should be in compliance with the dates set by the IRS or federal government. Now that you are aware of the dates, you should focus on getting the money ready to avoid delays. Paying taxes is usually a big challenge to many small business owners, and it is common for them to have issues with the IRS. Withholding the correct amount will ensure that you don’t get into problems with the IRS. IRS Withholding Calculator or paycheck calculator can help you determine the right amount to withhold as taxes.
If you want things to run smoothly in your business, you should keep all the tax and payroll records. The most suitable technique for keeping your tax records is creating a pay stub. On the homepage of this website, you will learn a few tips for making a pay stub. Also, you should ensure you file all the tax forms. The best way to avoid fines is paying the taxes on time.
Since tax preparation is a complicated process; most small business owners opt for payroll services. Hiring payroll services will ensure that you do not make any mistake in the process and comply with all the IRS laws and guidelines. Therefore, if you want to do payroll and tax services yourself, you should use the ideas discussed in this guide.