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Wednesday, February 18, 2015

PAYROLL PROCESSES




Gardner and Billing CPAs, PLLC process payroll for numerous clients, and the services we provide range from a small component to the complete package. Clients utilize our services for calculating net pay, computing withholding taxes, submitting tax payments to the state and federal agencies, completing quarterly and year end reports and preparing and submitting W2s and W3s at the end of the year. 

If you are new to the payroll process, the Small Business Administration suggests the following 10 steps to setting up a payroll system. If you’ve been processing payroll for a while, you might want to review the information to see if you can improve your system. And remember, if you need additional assistance, come in and talk to our CPAs.

SBA 10 Steps to Setting Up a Payroll System
Whether you have one employee or 50, setting up a payroll system not only streamlines your ability
to stay on top of your legal and regulatory responsibilities as an employer, but it can also save you time and help protect you from incurring costly Internal Revenue Service (IRS) penalties.
Here are 10 steps to help you set up a payroll system for your small business.
  1. Obtain an Employer Identification Number (EIN). Before hiring employees, you need to get an employment identification number (EIN) from the IRS. The EIN is often referred to as an Employer Tax ID or as Form SS-4. The EIN is necessary for reporting taxes and other documents to the IRS. In addition, the EIN is necessary when reporting information about your employees to state agencies. You can apply for an EIN online or contact the IRS directly.
  2. Check Whether You Need State/Local IDs. Some state/local governments require businesses to obtain ID numbers in order to process taxes. (Montana does requires a state withholding account through the Department of Revenue as well as a State Unemployement Insurance account through the Department of Labor & Industry and Worker's Compensation Coverage.)
  3. Independent Contractor or Employee – Know the Difference. Be clear on the distinction between an independent contractor and an employee. In legal terms, the line between the two is not always clear and it affects how you withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unemployment taxes.
  4. Take Care of Employee Paperwork. New employees must fill out Federal Income Tax Withholding Form W-4. Your employee must complete the form and return it to you so that you can withhold the correct federal income tax from their pay.
  5. Decide on a Pay Period. You may already have a manual process for this, but setting up a pay-period (whether monthly or bi-monthly) is sometimes determined by state law with most favoring bi-monthly payments. The IRS also requires that you withhold income tax for that time period even if your employee does not work the full period.
  6. Carefully Document Your Employee Compensation Terms. As you set up payroll, you’ll also want to consider how you handle paid time off (not a legal requirement, but offered by most businesses), how you track employee hours, if and how you pay overtime, and other business variables.
    1. Remember that other employee compensation and business deductibles such as health plan premiums and retirement contributions will also need to be deducted from employee paychecks and paid to the appropriate organizations.
    2. Keep track of gross pay and your contributions
  7. Choosing a Payroll System. Payroll administration requires an acute attention to detail and accuracy, so it’s worth doing some research to understand your options. Start by asking fellow business owners which method they use and if they have any tips for setting up and administering payroll. Typically, your options for managing payroll include in-house or outsourced options. However, regardless of the option you choose, you -- as the employer -- are responsible for reporting and paying of all payroll taxes.
  8. Running Payroll. Once you have all your forms and information collated, you can start running payroll. Depending on which payroll system you choose, you’ll either enter it yourself or give the information to your accountant.
  9. Get Record Keeping Savvy. Federal and some state laws require that employers keep certain records for specified periods of time. For example, W-4 forms (on which employees indicate their tax withholding status) must be kept on file for all active employees and for three years after an employee is terminated.  You also need to keep W-2s, copies of filed tax forms, and dates and amounts of all tax deposits.
  10. Report Payroll Taxes. There are several payroll tax reports that you are required to submit to the appropriate authorities on either a quarterly or annual basis. If you are in any way confused about your obligations, take a look at the IRS's Employers Tax Guide, which provides some very clear guidance on all federal tax filing requirements. Visit your state tax agency for specific tax filing requirements for employers.

Thursday, February 5, 2015

Making Time (excerpt from the SBA)



You planned on getting to work early to finish the project that's due today, but now the car won't start. You know you wrote the mechanic's name down somewhere, but now you can't remember where you put it. You frantically search through your notes, but you can't find it anywhere. There's no way you're going to have time to finish your project. You start to panic.

The clock just keeps ticking. 


Most of us feel swamped occasionally. With hectic work schedules, family responsibilities, and social engagements, there just doesn't seem to be enough time for everything. Managing time wisely reduces or even eliminates much of the chaos in our lives.

The first step in learning how to manage your time is to develop a general work schedule. Your work schedule should include time for yourself as well as time for the maintenance of your business.


First define then prioritize the major elements of your workload. Identify critical deadlines, routine maintenance items, and fun/relaxation time. Answering questions like "How much time do I have to make this decision, finish this task, or contact this person?" will help you start identifying what needs to be done immediately versus what can wait. Setting priorities depends on deadlines, how to get the information you need, and whether you can delegate or get assistance from others. If you are involved in group projects, reserve additional time for communication and problem-solving.



Once you have identified your priorities, look at all of your options for achieving them. Evaluate and move forward with the ones you feel are the most useful for you. The only time to consider changing approaches mid-task is when you know the change will save time. If you are in doubt, it is usually best to continue in the direction you started.

By setting up your work schedule and identifying your priorities, you have already started down the road to more effective time management. Other time management suggestions you may find useful for managing both your business life as well as your personal life include the following:
  • Contract out tasks you do not have the expertise to complete.
  • Start the morning, afternoon, or evening with the most worrisome task before you. This will reduce your anxiety level for the next task.
  • Complete deadline work early to reduce stress and lighten your work schedule, as well as to give you more self-confidence about managing your schedule.
  • Know your capacity for stress. When you are hitting overload, take the break you need (even if it is a short one) when you need it.
  • Stay organized. Take time at the end of each day to briefly organize your desk and make reminder lists of tasks for the next day or week.
  • Take advantage of down time between busy periods to review your schedule and reevaluate your priorities.
  • Get physical-walking, bicycling, swimming, or organized sports activities helps to discharge stress. Stretching, yoga, jumping rope, sit-ups, playing with children, or doing yard work are other types of therapeutic breaks you should consider during times of stress.
  • Have fun while working or playing; a good sense of humor can keep most problems in perspective.
  • Divide up your time among business development, personal needs, volunteerism, and family. Start by allowing 25 percent of your time for yourself. Each time you make a commitment, set a timeline for your involvement. Remember that maintenance takes at least 25 percent of the time you spend on any project whether it's business, marriage, or serving on the board of a non-profit organization.
  • Build flexibility into your schedule. Your availability to family and friends depends on the flexibility you build into your schedule.
In the bigger picture, consider the relationship between your business life and your personal life. Be as realistic as possible when answering the following questions, keeping in mind what is most important to you:
  • What are your long term goals? Your partner's goals?
  • Where are the conflicts, and where are the similarities?
  • What is it that you really want to do? List all possible ways to accomplish this.
  • How long will it take you to reach your goal?
  • How do your timeline and goals affect your family (parents, siblings, partner, children)?
  • How do your personal goals conflict with or match your business goals?
  • How much time can you donate to community programs?
  • Have you talked about your personal goals with your business partner?
  • Have you talked about your business goals with your personal partner?
Don't underestimate the toll that emotional stress takes on your physical health and your ability to concentrate on your work or enjoy time with your family.  Make sure you have time for the important people and events in your life.