Small businesses struggle without support.
You need a team of professionals taking care of the behind-the-scenes - like payroll taxes - while you handle the rest.
It’s crucial to know what’s at stake before your payroll taxes get pushed to the bottom of your to-do list. Misfiling or submitting late on deadlines can cause long-term compliance issues and result in costly mistakes such as penalties, fines, and accounting costs.
Avoiding these issues starts with answering the essential question: how do I set up payroll taxes for my small business? Let’s dive into it and review all the answers you need to know before getting started.
Payroll Taxes for Small Business
The secret cheat code for small business payroll taxes is to work closely with a reliable payroll service provider.
At ConnectPay, we manage payroll for small businesses and understand all the common roadblocks and concerns with payroll management. Our small business payroll specialists are available to assist you with answering your payroll questions and getting your company set up right the first time.
Schedule a call to find out what services will help your business succeed and receive a custom solution tailored to your small business.
Get Required Paperwork
Payroll taxes, also referred to as employment taxes, are paid to the IRS and other local governing bodies. According to the IRS, these taxes include federal income taxes, social security, medicare taxes, and federal unemployment taxes (FUTA).
As an employer, you must both deposit and submit reports on your company’s payroll taxes. By the end of the calendar year, you will need to prepare specific paperwork for the IRS and your local government, depending on your state. This paperwork is generally submitted to the IRS and Social Security Administration (SSA), respectively.
The documentation required includes:
Get Registered
Before depositing and reporting your payroll taxes, your small business needs an Employer Identification Number (EIN). To register for your EIN, you must determine your eligibility and submit your online application.
The documentation you will need to provide to the IRS includes:
- Proof your business is located in the U.S. or within U.S. territories
- Your own Taxpayer Identification Number (SSN, ITIN, EIN)
Once you have collected your documentation, submit your EIN online application and await your online approval.
Get a Plan
After you’ve coordinated with the IRS and collected all your paperwork and approvals, the next step is to set up your payroll policies and procedures.
Payroll policies and procedures you need to establish include determining your:
- Pay periods
- Pay methods
- Pay frequency
- Time and attendance tracking, including PTO
Calculate Tax Withholding
As a part of your payroll tax plan, it’s crucial to understand income tax withholding. Depending on your employees’ dates of employment and the total wages they’ve earned, the tax withholding each employee will need to pay varies.
The IRS has a Tax Withholding Estimator for your employees and your payroll staff to use, but the best way to get an exact number is to work with a local trusted payroll provider.
Send Payroll Tax Payments
The IRS requires quarterly payroll tax reporting and payments on a monthly or semi-weekly basis. In addition to your federal payroll tax payments, you may be required to submit payroll tax payments to several different agencies. Depending on your state, your local and state governments may also require payroll tax payments as well.
The Best Way to Set Up Payroll Taxes for a Small Business
All the hard work that goes into setting up your payroll taxes can be taken care of when you work with a payroll company that has an in-house tax team.
For new small businesses, at ConnectPay, we help you get set up by taking care of your payroll services, filing your payroll taxes, and giving top payroll recommendations based on years of expertise. If you haven’t done so already, our team can also register your business for withholding and unemployment in your state.
You deserve to have efficiently operating payroll and have that weight lifted off your shoulders. Whether you’re a new small business or an established small business, we can help you find the best, affordable payroll solutions to solve your business’s exact needs. Schedule a call today with one of our small business payroll experts who specialize in payroll taxes for small businesses.
