How to set up payroll
Congratulations — you’re a business owner. Now it’s time to get some help — employees. But before you advertise for help, you need to get yourself up to speed with the entire process of paying your employees.
Here’s what you need to do before tackling payroll:
Prepare information
Hiring employees means paperwork.
- Get an Employer Identification Number from the IRS. Use it to report taxes to the IRS and state agencies.
- Obtain a state or local business ID if necessary. Contact local and state government officials to see whether you need an additional tax ID number.
- Obtain essential information from each new hire. You’ll need a Social Security number or an Individual Taxpayer Identification Number. Make sure you get each employee to fill out Form I-9 to verify employee eligibility. For proper payroll processing, each employee will have to fill out Form W-4 as well.
Keep an eye on classification
Of course, like many companies, you may have a mix of staff employees and independent contractors. You can’t blur the line between them, and you need to be aware of the different rules and paperwork for each group. Consult an employment expert and work with IRS Form SS-8, which can help you make a determination. One of the biggest differences between an employee and an independent contractor is the employer’s requirement to withhold and pay payroll taxes. If you make a mistake here, the penalties can be severe.
The Fair Labor Standards Act also requires employers to make a distinction between employees who are subject to its provisions and those who are not, i.e., exempt and nonexempt employees. One of the key differences is that nonexempt employees are entitled to overtime pay and exempt employees are not. Again, the distinction can be complex, so work with a qualified expert.
Set up the system
First, consider a pay period. Weekly, every other week, and twice monthly are common options. State and local laws may limit your choices. Also consider what your employees might want. For example, accounting departments often like twice monthly because it means 24 even periods, while every other week means 26 payments — it doesn’t divide evenly into a year. But employees often like their paychecks on the same day of the week.
Whatever you do, be transparent. Share important details about the process with employees: how they’ll be paid — check or direct deposit — and any deductions they should know about. Add these details to your employee handbook.
Finally, consider how you’ll handle payroll. Once you get more than an employee or two, it will start taking up increasing amounts of your time and energy to make the right calculations and issuing the checks or direct deposits. That’s why many companies choose to outsource the entire payroll function. If you do choose to do that, make sure the provider you hire can meet your business’s particular needs.
This is just an overview of the many payroll obligations you will face. Be sure to work with qualified professionals to keep on top of all your responsibilities.
Need Help Setting Up Payroll?
Don’t want to do it yourself, give us a call at 772-466-0440 or complete our quote form to get started.
Copyright 2024
At Atlantic Payroll Partners, we have over 10 years experience, providing local businesses with quality solutions. We’re more than just a payroll company, we’re a PEO that provides HR Consulting, Workers’ Compensation, Employee Benefits, Accounting, and a variety of business and personal insurances.
Spotlight on Workers’ Compensation?
Did you know that not all Workers’ Compensation Insurance is the same?
That’s right, you can save money on workers’ comp by partnering with a PEO, like ours. You can save thousands, by not paying a workers’ comp audit.
How? By benefiting from pay-as-you-go workers compensation. Utilizing daily, accurate payroll data cuts out the costly mistakes that happen when you estimate your needs.
Interested in saving, start a quote here or call us at 772-466-0440. We’d love to hear from you.
How does payroll outsourcing work?
How does payroll outsourcing work?
Are you ready to go from DIY or in house payroll to letting someone else handle it for you? If you’re business has experienced growth as of late you may find it advantageous to let someone handle your payroll, by using a payroll outsourcing provider.
Payroll outsourcing can differ from provider to provider but this is the gist. After you decide what business to work with, the business will need information about your employees and your current payroll practices. You’ll need to provide a list of current employees for your business to your new provider. Your provider will ask for:
- Your pay period(s).
- Pay rates for employees.
- PTO policy.
- Benefits that are currently offered.
- Information about garnishments
- Other payroll deductions
In addition to information about rates and garnishments your payroll outsourcing provider will need to know if you still plan on filing your 940 and 941 taxes or if they need to take over that task. It’s best to let your provider handle that task. Your Federal Unemployment Tax Act, FUTA corresponds with the Form 940. The Form 941 relates to FICA, which is the Social Security and Medicare taxes that are paid on the behalf of your employees.
Who handles the payroll taxes is a huge differentiator?
At Atlantic Payroll Partners we’re a PEO, which is a professional employment organization. We typically handle the payroll and the payroll taxes for our clients. Our payroll fee includes your taxes and payroll. Due to the size of our business, we pay our taxes daily. When working with a PEO, you use the PEOs FEIN number; that’s how the taxes are handled so that you are no longer responsible for them.
The opposite of a PEO is an ASO. ASO stands for administrative services only, an ASO will typically provide payroll but they will not handle the payroll taxes. If they handle the payroll taxes, there is usually an additional fee for the taxes. If you work with an ASO your taxes continue to be filed under your FEIN and continue to be your responsibility.
That’s the simplest way to break down the difference between a PEO and ASO. PEO, you use the payroll companies FEIN; ASO you continue to use your FEIN.
What does payroll outsourcing cost?
The cost varies, you’ll normally pay either a flat rate or a % of the payroll. Typically, you’ll find that the overall cost is lower than the cost hiring someone to handle the task in house; when you compare the expense salary and benefits to payroll outsourcing. That’s a general way of calculating payroll outsourcing cost.
Copyright 2024
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Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.
The Why’s and How’s of Payroll Outsourcing
Payroll Outsourcing…
In Bloomberg Tax & Accounting’s 2019 Payroll Benchmarks Survey, 69.2% of respondents said they used outside vendors to perform payroll functions, while only 30.8% said they did not outsource payroll.
Let’s look at the practical and financial reasons so many companies are taking the payroll outsourcing plunge.
Payroll compliance
Payroll laws are numerous in scope, occurring at the federal, state and local levels. Compliance depends on knowing which laws your business must follow, adhering to the rules that apply, monitoring regulatory changes, and updating your payroll policies and procedures accordingly. This can be stressful and time-consuming.
Moreover, failure to obey the rules can lead to steep fines from the government and even reputational damage to your company.
When you outsource payroll, the provider takes on many of your compliance responsibilities — giving you peace of mind and more time to focus on growing your business.
Accurate and timely payrolls
According to a market analysis by Beroe Inc., key performance indicators for payroll outsourcing include accuracy of pay slips and timely processing of payrolls.
Further, a survey by the Workforce Institute shows that employees don’t have much patience when it comes to paycheck errors, as 49% of respondents said they will look for another job after only two payroll mistakes.
Payroll outsourcing companies have experts on hand who understand the ins and outs of gross-to-net calculations — which are crucial to paycheck accuracy. Also, their job is to make sure their clients’ payrolls are done on time.
Self-service features
Employees today want immediate access to payroll information and expect their employers to provide self-service options. This is likely why 73% of respondents in the Bloomberg survey said they had an employee self-service system for payroll.
Besides processing their clients’ payrolls, many reputable payroll companies provide access to a self-service platform that lets employees:
- Make basic payroll changes, such as those to their direct deposit and Form W-4.
- Send time-off requests to their supervisor or manager.
- View and print payroll tax documents, such as Form W-2.
- Update personal contact information.
- Review pay data.
- Print pay stubs.
Disaster recovery
As demonstrated by the COVID-19 pandemic, employers should be prepared for unexpected or severe disruptions to their businesses. Credible payroll providers already have a contingency plan in place that can ensure your employees are paid on schedule during disasters and emergencies.
Cost savings
Outsourcing your payroll can save you time and money via direct and indirect ways — including by keeping your business compliant, minimizing paycheck mistakes, delivering access to self-service technology and helping you meet your payroll obligations in the face of disasters. Importantly, you can lower payroll staffing costs, as you don’t have to pay wages, salaries, overtime and benefits to a full in-house team.
Though exact savings depend on various factors, the report by Beroe Inc. states that outsourcing payroll can reduce expenses by approximately 20%. Want to start saving on your payroll? Get started with a quote.
Copyright 2024
Want more? Subscribe to our blog.
Why Atlantic Payroll Partners
The biggest payroll companies probably won’t have time for your business. It’s that simple, you’ll be a number. At Atlantic Payroll Partners, you’ll be the opposite. We’ll know more than your name; we’ll know the names of your children and their birthday’s as well. We will know you.
We’ve been helping Florida business by managing their payroll and providing workers' compensation quotes for ten years. We help keep payroll cost affordable by provided transparent PEO payroll quotes that allow you to plan your budget accordingly. Like the big payroll companies, you can manage your payroll and payroll timekeeping with us, while reaping the benefits of PEO risk management.
Thinking about payroll outsourcing can be scary. Make sure you know what to expect from payroll outsourcing providers; to make the best decision for your business. In addition to offering payroll, and workers' comp quote we offer: Human Resource consultations, Accounting services, and benefits such as, 401ks and Healthcare plans.