When setting up payroll in the United States, there are certain rules and taxation that you need to take note of. As a general rule, the primary concern of any company in the United States is that they need to comply with the tax laws including the federal, state, and individual income tax of employees. They also need to pay for social security, Medicare, as well as take care of other concerns. Below are the steps to set up payroll for your business in the United States.
Get an EIN and A Local Business ID
The first step to set up for payroll in your company is to get an Employer Identification Number (EIN) from the Internal Revenue System (IRS). The EIN also refers to the employer tax ID, and it is used to report taxes and other information to the IRS as well as other state agencies. You can easily apply for an EIN online or visit the nearest IRS office near you. Another thing that you need to get is the state or local ID. State and local governments require companies to get an ID for tax processing. You can visit your local or state office to find out the requirements when processing your tax ID number.
Organize Your Team’s Information
You need to organize your employees so that you file reports and taxes on behalf of them. To organize the information about your team, you need to keep their information. The details that you need from your employees include their full name, date of employment, social security number, date of birth, address, and compensation details. It is crucial to use the Form I-9 to verify the eligibility of the employees for employment in the United States. For contractors, use the W-9 form.
Choose A Pay Period
Another important thing to consider when setting up payroll in the United States is to set up a payday. Setting up a payday largely depends on what is required by the state. Moreover, it is also best to set it up over a period of time when it is convenient for you.
Pick A Payroll System
What kind of payroll system should you use for your business? Will you use a manual or an online payroll service? You have to take note that calculating payroll can be tough and that you might find it difficult to get it right the first time. Thus, it is important to research your options to make sure that you set up a payroll method that is accurate and will save you time in getting the details right.
Since the payroll tax is state-based, the procedure varies from one state to the other. Because setting up payroll is different from one place to the additional seeking help from a specialist who can simplify the process and ensure full compliance with the local law. Let us at MKS&H help you. Our professional accountants keep you on track with all of your financial development, bookkeeping, business expenses, and payments.
Having someone reliable to handles your finances also lowers the risk for your business to be in financial danger because it removes the likelihood of miscalculations from happening.