What payroll schedule should you use?
As a small business, you can run payroll using one of these three schedules:
Weekly: Employees receive paychecks on a particular weekday (52 paychecks a year). On this schedule, for example, your employee’s payday could be every Friday.
Bi-weekly: Every two weeks, employees receive paychecks on a specific day of the week (26 payrolls a year). For example, your employee’s payday could be every other Friday. The bi-weekly pay schedule is the most common payroll schedule, as it’s used by 43% of businesses.
Semi-monthly: Each month, employees receive paychecks twice on two specific dates of the month (24 payrolls a year). For example, your employee’s pay dates could be on the 15th and last day of each month.
Once you’ve decided what payroll calendar is right for your business and employees, you can start issuing paychecks. Next up: filing taxes.
Helpful resource: How to Do Payroll (and Avoid the Mistakes)
How to file payroll taxes
It’s not enough to deduct taxes from your employees’ pay. You must also file them with some agencies, including the federal government.
You’ll report FICA quarterly using Form 941 - Employer’s Quarterly Federal Tax Return. The due date is the last day of the month following the quarter. For example, if your quarter ends on March 31, the form is due on April 30.
You’ll report FUTA on Form 940 - Employer’s Annual Federal Unemployment Tax Return at the end of the financial year. The due date is January 31.
Document and store payroll records
Complying with the law is as simple as keeping accurate records and correct payroll calculations for the fiscal year.
You should keep payroll documents for a minimum of four years for tax purposes and save your other files according to federal or jurisdictional requirements.
Consult the appropriate federal, state, or local agency to ensure you’re keeping the proper documents for the correct length of time.
When should you outsource payroll?
As your small business grows and you hire more staff, managing payroll on your own can become increasingly complicated and consume a ton of your time.
Instead of dealing with administrative tasks, you’ll want to focus solely on your small business operations. When that happens, outsourcing payroll makes sense.
A payroll provider can handle your taxes and withholdings for a small fee. They pay the appropriate person, tax body, or benefit. You tell them who gets paid for how many hours or their salary.
We highly recommend outsourcing your payroll to Gusto, a software application that walks you through the payroll process. Gusto automatically files and pays your payroll taxes, so you don’t have to bother with it. Thanks to its simple interface and automation features, Gusto was rated an Editor’s Choice by PCMag.com.
When it’s time to record payroll costs on your books, you can count on Bench to take care of it for you. Learn more about how we save small business owners hours of admin every month.
Simplify your payroll process
Having a solid payroll process in place and an organized payroll calendar is one of the most important functions of running your business. Download Bench’s calendar here to help stay on track, stay compliant with the IRS, and keep your employees happy.