hi folks dave waring here again with FitSmallBusiness.com and today's lesson
of the day
in today's video we're going to continue our series on how to hire and manage
with a look at the basics of payroll and how to pay your employees
so let's get started one of the advantages of working with independent
contractors is that you simply write a check and it's the contractors
responsibility to pay taxes. If you decide to hire employees however then
you are required by the federal government
most state governments and some local governments to withhold taxes from their
paycheck and remit those funds to the appropriate tax authorities. In many
instances companies will also withhold or deduct money for things such
as insurance premiums and ira contributions
there are three options for doing payroll: 1. Do it yourself
2. Hire part-time accountant or 3. Use a payroll software solution. For most small
businesses we think payroll software offers the best combination of
efficiency and cost Intuit's full service payroll solution which is
popular among many small businesses cost $79 a month plus $2
for each employee paid using the system
after initially setting up your payroll software the process of paying your
employees should take less than an hour per week.
Your payroll software should let you do the following: calculate employee gross
pay, calculate employee take-home pay after income taxes FICA and deductions
for things like health insurance retirement and child support pay
employees by printing out checks are making a direct deposit fill out and
submit required paperwork for federal state and local income taxes send
electronic payments to the tax authorities
regardless of whether you use payroll software or some other method for
handling your payroll in many instances you will need a way to keep track of the
hours that your employees work in order to calculate gross pay
how should you keep track of employee hours if you have a few employees with
little variation and hours from week to week you might use a google or Excel
spreadsheet for tracking hours
I've included a link to a free excel timesheet template in the resources link
below this video if you have lots of employees and or the hours they work
very
there are a number of free and paid software solutions available time clock
free.com offers the ability for employees to check in and out of work
from assigned computers which might be very useful if you're dealing with lots
of new employees that might not always be punctual about showing up at their
assigned hours for a top-of-the-line solution with tremendous functionality
and customer support consider replicon . com dealing with over time depending on
how many hours and employee works per week or per day
you may owe them overtime pay for companies covered by federal labor laws
which are companies with over 500 k and sales and or that are involved in
interstate commerce
you will need to pay most employees 1.5 times their hourly rate for every hour
per week over 40 for example a worker that gets paid twenty dollars per hour
would receive thirty dollars per hour for each additional hour exceeding 40 in
California there is a daily limit of eight hours per day before overtime pay
kicks n even if the employee doesn't work 40 hours per week
I've included a link in the resources link below this video to a list of
overtime loss for all 50 states many salaried employees are also owed over
time if they work more than 40 hours per week
employees with managerial duties or that have a fair degree of decision-making
power tend to be exempt from overtime pay requirements
I've included a link in the resources link below this video where you can
learn more about the difference between exempt and non-exempt employees dealing
with vacation and sick days
employers have a great deal of discretion and providing paid vacation
time and paid sick days for their employees
however you should have a company-wide policy and a system for recording the
accrual and use of both vacation and sick days into its payroll solution
definitely offers the ability to record the accrual and use of both vacation and
sick days and we assume some other payroll software does as well
I've included a link in the resources link with more advice on creating a
vacation and sick leave policy voluntary deductions in some cases
employers may need to also provide employees the ability to have certain
things deducted from your paycheck
these include things like contributions to an IRA or 401k plan
health insurance premiums and job related expenses
these deductions can be made on a pre or post tax basis depending on what the
deduction is for and can easily be handled by most payroll software
reporting requirements and payments
once you have calculated your payroll you will need to complete the necessary
reporting requirements and submit payment in the required timeframe
here's a list of the paperwork involved although unemployment insurance payments
are not included in payroll
because they are based on payroll you will use your payroll calculations to
pay unemployment insurance as well I've included an article in the resources
lake with more on the timing requirements and how to know when you're
required to submit payments the benefits of a full-service payroll solution
payroll software solutions can help you figure out the amount you need to pay
however they don't always automatically complete or send the necessary forms or
make payments to the tax authorities on your behalf
this is another reason why we recommend working with into it or a similar
full-service payroll solution which handles these things for you as an
example into its full service solution offers the following services
you can learn more about this service in the resources link below this video
what questions or comments do you have about handling payroll that were not
answered in this video
let us know in the comments section below for more great advice on how to
start and run a successful small business
also be sure to visit us at fitsmallbusiness.com today thanks for
watching