Dealing With Payroll

Hiring employees means that you will have to upgrade your payroll system. If you have been working as a one-woman show up until this point, it means that you have to establish a payroll system and communicate it to your employee(s).

Employees will be interested in, and should be notified of, the following items in regards to payroll:

Pay Cycles

When will the first paycheck be received? Are employees paid weekly, bi-weekly, monthly? This type of information can impact the employee's personal budgeting system so it is best to give this information right away. It should be outlined in your personnel policies manual. For more information on creating this resource, follow this link to our Writing Personnel Policies section.

Taxes and Other Deductions

Everyone knows that Uncle Sam must be paid. Be sure to establish guidelines on how much is being deducted and for what reasons. How much federal tax is withheld? How about state and local taxes? Be clear on the worker's compensation and unemployment taxes that must also be deducted. If medical insurance is a benefit that you are offering, clearly show the amount being deducted for this reason on the pay stub. For more information on taxes, follow this link to our Tax Issues section.

Direct Deposit

This is a convenient service offered to employees at most work places. The paycheck is deposited directly into the employee's bank account, virtually eliminating the paper check. On payday, a voided copy of the check is given to the employee for his or her records only. The direct deposit system is easier on both the employer and the employee in most instances. For more information on this option and obtaining the necessary paperwork for your employee to complete, contact your bank.

Outsourcing Payroll

It is a good idea to consider outsourcing your payroll services. You can find yourself spending a significant amount of time trying to figure out all the ins and outs of payroll processing. Having someone else do it for you gives you back this time.

When using a payroll company, you need to give them the withholding amounts for each of your employees. They will take care of processing, printing, and delivering (to the employee or to the bank for direct deposit) the paychecks. You can expect to pay approximately $10 - $20 a month flat rate for this service. Other fees will be added on to this amount, such as $1 per paycheck processed.

Some websites to explore for more information on outsourcing payroll are:

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