A Step-By-Step Guide on How to Prepare Payroll and Taxes Yourself
It is usually more stressful to manage a small business because of the limited workforce. As a small business owner, you will be required to focus your time, energy, and talent on different tasks of the business. Hiring an in-house team might not be a good idea since it will increase your business expense. For that reason, even if a tax is challenging, you will be required to learn how to do it yourself. One of the tasks that every small business owner should learn how to handle is the preparation of payroll and taxes. If you decide to do payroll and taxes yourself, here are the most important things to note.
As a small business owner, before you start preparing taxes and payroll for your team, you should apply for an Employer Identification Number. EIN is an important number since it makes your business known to the IRS. 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. If your workers are employees, then they will be required to fill W4 forms. On the other hand, if the workers are independent contractors, they will need to fill W-9 forms.
The next step is creating a payment schedule. The most important dates that must appear in your payment schedule are employee pay dates, tax payment 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. Since the preparation of taxes is a sensitive matter, most businesses usually find themselves on the wrong side of the IRS laws. Withholding the correct amount will ensure that you don’t get into problems with the IRS. If you are not sure about the amount to withhold, you should use an IRS Withholding Calculator or paycheck calculator.
Record keeping is a crucial task for every business owner to boost efficiency. 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. Besides, you should have all your tax forms filed. Filing of tax forms should be done on time to avoid issues with the authorities and fines.
Most business owners prefer working with payroll preparation experts to avoid the daunting and stressful task. Identify the right experts that will handle your payroll system smoothly and efficiently. Therefore, if you want to do payroll and tax services yourself, you should use the ideas discussed in this guide.