Important payroll processing steps for small businesses

Payroll can be one of the trickier elements in the operation of a small business. It is an absolute necessity in nearly every business, but if completed incorrectly can lead to a number of financial issues. Therefore, setting up a clear, easy payroll process is a smart step for entrepreneurs.

Entrepreneurs should begin by filing for identification numbers. Both an employer identification number and state and local identification numbers will open the door for proper government filings, according to The EIN may not be required for all small businesses, but those with a staff, run as a corporation or withhold taxes to a non-resident alien will require a number.

Properly classifying employees - both full-time and contracted ones - will simplify tax filings and help a business avoid unnecessary penalties for incorrectly categorizing staff members. Meanwhile, employees should fill out W-4 forms.

Scheduling employee benefits will provide a clearer picture of what amounts should be subtracted from payroll. Establishing sick days, vacation days, benefits and other payroll deductions should allow for automatic calculations, according to

These are a just a few measures small businesses need to take when establishing their payroll process. More will likely be necessary, but completing these starting tasks will help lay the foundation for an accurate payroll process.

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