How to Do Payroll and Taxes Yourself
Access to a limited workforce makes it hard for small businesses to grow and thrive. 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. The two important things that you should learn how to do are preparation of taxes and payroll for your business. The article herein is a comprehensive guide on how to do taxes and payroll yourself.
Before you start preparing your taxes and payroll, you need to have an Employer Identification Number (EIN). 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. In this website, you will learn about the process of applying for an Employer Identification Number. Next, you need to inform the IRS if your workers are either employees or independent contractors. If your workers are employees, then they will be required to fill W4 forms. In the case of independent contractors, they will have 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. Always have in mind the state regulations when setting the dates. Always ensure that the money required is available on the two important dates. 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. If you are not sure about the amount to withhold, you should use an IRS Withholding Calculator or paycheck calculator.
Keeping tax records is encouraged if you want to solve issues with the IRS fast. The best way to keep your tax records is by making 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. Late payment usually attracts huge penalties that might cripple your business financially.
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. With the help of these steps, you will not have to worry about hiring a professional to do your taxes and payroll.