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According to the Bureau of Labor Statistics, U.S. payroll employment increased by 263,000 in April of 2019, and unemployment fell to 3.6 percent. With such a high percentage of the country employed, many business owners are wondering how to do payroll most efficiently.

It’s an undeniably imperative business function, and knowing how to do payroll properly will help avoid penalties.

Furthermore, your employees will have greater respect for you. When your employees know they can expect reliable payments for each pay period, they are more apt to trust you.

If you run into payroll snafus, however, their trust will erode and your team could unravel. So, what exactly do you need to do?

What Exactly Does Payroll Entail?

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Those who haven’t yet learned how to do payroll often don’t fully understand what it entails.

On the surface, it may seem like it’s little more than writing checks or approving direct deposits on a weekly, bi-weekly, or monthly cycle.

But there’s a lot more to it than that. In addition to making payment transactions, payroll necessitates accurate accounting, time-card records, tax forms, withholdings, employee information, and much more.

How To Do Payroll Without Negatively Affecting Your Business

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The easiest way to know you’re doing payroll without negatively affecting your business is also the most expensive way: hire an accountant.

Seeking the help of a qualified and reputable account will ensure you cross all of your T’s and dot your I's when it comes time to file taxes.

Sadly, this option isn’t available to every business, especially small businesses with tight budgets.

The good news is there are other options for how to do payroll if you can’t hire an accountant.

How To Do Payroll The Manual Way

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The first way to learn how to do payroll properly is the manual process, whereby you see that each form is filled out on time.

You will have to manually submit your filings to the IRS at the end of the year.

1. Ensure all employees fill out the right forms

2. Ensure all contractors fill out the right forms

3. Apply for the right credentials

4. Make prudent calculations

5. File documents

6. Pay taxes

How To Do Payroll The Easy Way

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Learning how to do payroll the manual way is an intensive process that requires significant investments of time and energy.

Most business owners, especially small business owners without an in-house accounting team, don’t have spare time and energy to devote to the tediums of payroll and taxes.

Fortunately, there is more than one way to skin a cat, and it isn’t necessary to do manually (though it is cheaper).

To save time – but not money – a business can opt to use a third-party payroll and tax service.

Some services do use actual application software installed on a computer. Keep in mind, most of the services are cloud-based and can be run straight from your web browser.

Naturally, cloud services are more convenient because you don’t have to engage in time-consuming software installations, and the service’s web portal can be pulled up on your mobile devices too.

Services like Gusto and ADP simplify the payroll and tax preparation process. These services automatically generate tax forms and automate the process, so you don’t have to use pen and paper.

Third-party services like Gusto and ADP are a godsend for small business because they only charge an affordable monthly fee.

1. Do your research

2. Data entry tasks

3. Keeping track of the past

4. The most important step

Getting Your Ducks In A Row Before Tax Season

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Learning how to do payroll correctly is no easy task, especially if you’re a brand new business owner.

If you don’t have the time to learn the ropes on your own and don’t have the capital to hire an in-house accounting team, using a third-party service may be the only viable option.

Nevertheless, if you only have a handful of employees, choosing to do payroll and taxes on your own can save money.

Just remember: planning is key. You need to look ahead and see what’s coming down the road. That way you aren’t in a bind when the taxman comes calling.

If these tips helped you get your ducks in a row before tax season, feel free to comment below.

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