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Hiring
Employees and Processing Payroll
Hiring and managing employees are important
steps in your company's growth. Whether you've
decided to hire yourself as an employee of your corporation
or LLC, or if you simply need to add people to your
growing business, we can help. We've broken this
section down into 2 areas:
- Hiring Employees
- Processing Payroll
1. Hiring Employees
The first thing you should
do before hiring an employee or employees is to
know exactly why you need them. Many business
owners simply become overwhelmed and need to hire
an employee to handle the overload. The better
approach, as we've outlined in detail in our Automate
Your Business section, is to imagine your
business in 1 to 3 years and create an organizational
chart, job titles and job descriptions to match your
vision. Then, you can slowly "fill-out"
your organizational chart with employees until
your company reaches operating perfection!
The following steps are helpful:
The
Job Description This organizational chart approach requires you
to create a detailed job description for each position
in your company that includes:
- an overview of the position and responsibilities
- who is responsible for supervision of that position
- what is required on a daily, weekly, monthly
and even quarterly or yearly basis
- what constitutes successfully doing the job
(job goals)
- exact procedures for doing the job (please see
our section on the Business
Operations Manual for more information
on automating processes and procedures.)
Legal Requirements for Hiring
There are numerous Federal,
State and Local rules regarding hiring employees, and
most large companies maintain in-house legal counsel
and human resource departments to deal with these rules.
But, if you are a small company, these are unaffordable
luxuries. Therefore, here are some simple common-sense
guidelines for hiring employees:
- Do not discriminate based on race, color, gender,
religion,
handicap status, etc.
- Respect the applicant's right to privacy: marital
situation, economic background, personal life, etc.
- Don't imply things you can't deliver: job security,
benefits, etc.
- Observe all laws relating to minimum
wage, hiring young or immigrant workers.
- Follow the IRS guidelines
for hiring independent contractors.
- Follow all IRS and State new hiring requirements
(discussed below)
Tips on Hiring and Interviewing
| NOTE: Our Incorporation
and LLC clients receive access to a detailed, state-specific checklist that includes links to
state-specific forms and applications as well as specific information on hiring
employees and doing
business in your state.
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Before
Hiring the Employee Before hiring an employee you must do the following:
After Hiring the Employee
The following forms must
be filed for every new employee:
- Federal W-4 Form
- Federal I-9 Form (verifies the legal status
of the employee)
- State New Hire Reporting Form
These forms and any other employee paperwork must
be kept by the employer in an "employee file"
for at least 4 years.
2.
Processing
Payroll Okay,
so you've hired the employee, registered with the appropriate
agencies, obtained the necessary ID
#'s
and complied with the necessary regulations. The
next step is processing payroll.
There are basically 3 things you need to
know:
1. How much you are paying your employee(s).
2.
How much you need to take out of each paycheck for the
various Federal, State and Local Taxes.
3. A running
total of how much you've paid your employees, how much
has been taken out and for which reason (i.e. how much
was for social security taxes, how much for state unemployment,
etc.).
This is important because you will need
to know these totals to file quarterly tax forms.
Most accounting
software can
tabulate these totals automatically. So here's the overall process:
- Pay your employee(s) (either weekly, bi-weekly,
bi-monthly or however).
- Withhold the proper amount
from each paycheck, keep track of the totals either
with accounting software or manually.
- Deposit
the total Federal Taxes (Income, Social Security
and Medicare) owed monthly to the IRS.
- If
applicaple, deposit income or other State taxes
to your State's
taxing authority (this could be bi-weekly, monthly
or
quarterly).
- Quarterly file IRS Form 941
summarizing what you have deposited monthly
for the previous quarter. Yearly file the
IRS Form 940.
- Quarterly (or bi-weekly or monthly
depending on the State), file the necessary state
forms
summarizing
what
you've deducted and deposited from paychecks.
Are You Confused About Payroll Yet?
You should be. The government has taken a relatively
simple process and made it positively complex. However,
there is a solution that we recommend for every small
business. In fact, this service alone is one of
our most
highly recommended services: PayCycle.
PayCycle - Online Payroll Service
PayCycle takes a complicated process that can take
several hours a month and literally breaks it down to
about 5 minutes. It is the fastest, easiest and lowest
cost way for small businesses to manage payroll.
With PayCycle, you get all of the following for as
low as $19.99 per month:
- Instant, 100% guaranteed accurate federal, state
and local tax calculations
- Flexibility to pay your employees by FREE Direct
Deposit or by printing paychecks or paystubs
- Electronic federal tax payments with email reminders
before tax deadlines
- Electronic federal tax filing of forms 940s,
941s and W-2s with email reminders before filing
deadlines
- Export of payroll information into QuickBooks,
QuickBooks Online, and Microsoft Money
- Customized "To Do" list that tells
you exactly what to do and when
- New hire federal forms including W-4 and I-9
- New hire state forms (available with PayCycle
Plus)
- Electronic or pre-filled state tax payment coupons
and filing forms with email reminders for upcoming
deadlines (available with PayCycle Plus)
Using PayCycle, the process of doing payroll becomes
so simple and automated that we can't imagine doing
it any other way. In fact, we utilize PayCycle
for MyNewCompany.com, Inc. employees.
Best of all, PayCycle starts at just $19.99 a month.
That includes payroll (with direct-deposit capability)
for up to 5 employees no matter how many times or in
what manner you pay them. Additional employees can
be
added for just $0.99 per month.
Click
here for a 30 day FREE trial with PayCycle!
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