Steps to Launch a Payroll System from Global Resources

CHICAGO - Sept. 20, 2016 - PRLog -- The business consultants at Global Resources LLC understand that implementing a payroll system offers many advantages to business owners of small and medium – size businesses.  A sound payroll system can save time, streamline the managing of legal and regulatory responsibilities and help protect you from incurring costly Internal Revenue Service (IRS) penalties.

Below are 10 steps that may help you set up a payroll system for your business:

• Obtain an Employer Identification Number (EIN) - You first need to get an employment identification number (EIN) from the IRS. The EIN is often referred to as an Employer Tax ID or as Form SS-4. The EIN is necessary for reporting taxes and other documents to the IRS. In addition, the EIN is necessary when reporting information about your employees to state agencies. You can apply for an EIN online or contact the IRS directly.
• Determine Whether You Need State/Local IDs – Depending on your state/local governments, you may need to obtain ID numbers in order to process taxes.
• Know the Difference Between Independent Contractor and Employee – Understand the difference between an independent contractor and an employee. In legal terms, the line between the two is not always clear and it affects how you withhold income taxes, withhold and pay Social Security and Medicare taxes and pay unemployment taxes.
• Manage Employee Paperwork - New employees must fill out Federal Income Tax Withholding Form W-4. Your employee must complete the form and return it to you so that you can withhold the correct federal income tax from their pay.
• Choose a Pay Period- You may already have a manual process for this, but setting up a pay-period (whether monthly or bi-monthly) is sometimes determined by state law with most favoring bi-monthly payments. The IRS also requires that you withhold income tax for that time period even if your employee does not work the full period.
• Document Your Employee Terms- As you set up payroll, you'll also want to consider how you handle paid time off (not a legal requirement, but offered by most businesses), how you track employee hours, if and how you pay overtime and other business variables.
• Choose a System- Payroll administration requires attention to detail and accuracy, so it's worth doing some research to understand your options. Typically, your options for managing payroll include in-house or outsourced options. However, regardless of the option you choose, you -- as the employer -- are responsible for reporting and paying of all payroll taxes.
• Running Payroll - Once you have all your forms and information collated, you can start running payroll. Depending on which payroll system you choose, you'll either enter it yourself or give the information to your accountant.
• Keep Records - Federal and some state laws require that employers keep certain records for specified periods of time. For example, W-4 forms must be kept on file for all active employees and for three years after an employee is terminated.  You also need to keep W-2s, copies of filed tax forms, and dates and amounts of all tax deposits.
• Report Payroll Taxes - There are several payroll tax reports that you are required to submit to the appropriate authorities on either a quarterly or annual basis. Visit your state tax agency for specific tax filing requirements for employers.

About Global Resources LLC

Global Resources is a full-service business development group and general management consulting firm focused on small and medium-size privately-held companies in North America. We were formed to help small and medium-size businesses maintain positive cash flow, control costs and accelerate profitable growth, allowing entrepreneurs and managers to make the most of their work and their lives. Through business analytics, consulting and strategic tax planning, we are a lifetime resource that offers business owners the freedom to grow.  For more information, visit https://globalresourcesusa.wordpress.com/.