Payroll for your small business doesn’t have to be a time-consuming task. If you are wondering “can I process payroll myself” and pay employees in the right way, the answer is, yes, you can.
Small business owners can ensure they give employees paychecks in the right ways. Let’s show you everything you need to know to navigate the payroll system and deal with payroll taxes so self employed business owners can process payroll manually.
Can I Do Payroll by Myself?
Yes, it is possible to make payroll a DIY task, as long as you have the right tools, such as a full service payroll system. But before you begin, you will need to register with federal, state, and local tax agencies.
It’s important to maintain accurate payroll records so you can make sure that, whether you are looking to calculate net pay or calculate gross pay, you are obeying tax laws and have accurate employee information.
Processing payroll can be complex, which is why when you are looking up how to set up payroll, you might see recommendations to use outsourcing or a full service payroll software. This is to help you calculate payroll costs accurately and ensure employees’ wages are correct.
Online payroll accounting software is something that can be hugely beneficial here, as it calculates net pay, an employee’s gross pay, and ensures that all payroll taxes are calculated within the pay period and all payroll deductions are made so small business owners can benefit.
Can I Run Payroll Myself?
As a small business owner, it is possible to run payroll yourself. The payroll process includes three basic steps: preparing the payroll costs, paying old and new employees, and the post-payment process. More details below:
- Preparing the payroll costs for processing, and deciding who will do the payroll tasks before you start to hire employees or independent contractors.
This means processing payroll components like gross pay, net pay, and other components to run payroll practices.
- Paying employees using a step-by-step system to calculate an employee’s gross wages, calculate net pay based on timesheets, and other payroll processing components.
This means you can write employees paychecks and place them into their bank account via direct deposit in accordance with federal income laws.
- The post-payment process, which is a key part of processing payroll, and involves setting aside money for taxes, making tax payments, and sending payroll reports to the Internal Revenue Service (IRS) and the Social Security Administration (SSA).
However, you should also consider any local or state taxes in your payroll calculations. Paying payroll taxes is not just about tax payments to one major entity, which is why many small business owners opt for payroll software to calculate employees gross pay and the other essential components, such as social security tax, FUTA tax payments, Medicare taxes, and remit taxes.
- Using Software to Streamline the Payroll Process
- The main downside of manual payroll is the amount of time it takes to go through every employees’ time cards, ensure your tax deductions (FICA payroll tax, federal income tax, state income tax, etc.) and wage garnishments are accounted for. Not to mention you have to repeat this entire process on either a weekly, biweekly/semi-monthly, or monthly basis. It’s no surprise that some business owners prefer to outsource their business payroll entirely to someone with more know how.
- However, there is a way that you can make the process easier and faster, even if it’s your first time handling bookkeeping. That would be to use a payroll solution like our very own Buddy Punch.
Using Software to Streamline the Payroll Process
The main downside of manual payroll is the amount of time it takes to go through every employees’ time cards, ensure your tax deductions (FICA payroll tax, federal income tax, state income tax, etc.) and garnishments are accounted for. Not to mention you have to repeat this entire process on either a weekly, biweekly/semi-monthly, or monthly basis. It’s no surprise that some business owners prefer to outsource their business payroll entirely.
However, there is a way that you can make the process easier and faster, even if it’s your first time handling bookkeeping. That would be to use a payroll solution like our very own Buddy Punch.
Buddy Punch as a Payroll Tool
When we created our software, we wanted to make it easy to run payroll ourselves, but we had a decent-sized team of 20 employees across 3 different locations. Initially we thought that integrations with payroll systems such as Gusto and QuickBooks would be enough for us. But as we expanded our software into an all-in-one time tracking and employee scheduling solution, we realized that adding payroll functions would make it much easier to track all employee information – hours worked, pay rates, tax withholding and more – all in one place.
How Buddy Punch Compares to Manual Methods
Since Buddy Punch is a digital software tool, it naturally streamlines the payroll process compared to manual methods such as timesheets. Employees spend less time inputting data on their end, and you spend less time transferring their data to run payroll. Instead, everything is handled in just a few clicks thanks to Buddy Punch’s interface, which manages time tracking, scheduling, and payroll all in one place.
Additionally, Buddy Punch eliminates all accuracy, human error, and time theft concerns when it comes to the hours your employees are working. This is thanks to time tracking features that not only ensure your employees are accountable for when they’re on the clock, but also provide administrators with a closer look at how time is spent at work.
Once you’re running payroll in Buddy Punch, business owners get to:
- Easily manage payroll from anywhere and anytime, with use of automatic payroll tax filings and payments
- Access accurate and in-depth data to make it easier to streamline your operation
- Save time and reduce errors in the overall payroll process
You can even quickly import current employees and new hires, so all your employees and contractors can get paid in just a few simple clicks.
Other Buddy Punch Payroll Features Include:
- Unlimited Payroll Runs
- Direct Deposit
- Integrated Timesheets
- Employee Self-onboarding
- And More
Click here to learn more about Buddy Punch’s Payroll Options – and don’t forget the time tracking and employee scheduling features that you can use at will.
Can You Do Payroll Yourself?
For the sake of saving money for your small business, payroll processing is something you can do yourself, but you need to make some decisions on paying employees so you can write paychecks for them and pay taxes in a legal manner.
For example, you will need to decide how often you will pay, and if you will pay overtime or for any time off. You need to look at the employment laws where you are, as they will affect how much you pay employees. It may also be a good idea to check in with an employment attorney to make sure you are following everything relating to employer taxes appropriately.
Is Doing Payroll Easy?
A lot of business owners think that doing payroll can be time-consuming and frustrating, but processing your own payroll is easier than you think. You need to have the following components in place: completing a w-4, finding your EIN, deciding on a payroll schedule, calculating taxes, and filing forms.
Have Employees Complete a W-4 Form
Employees need to complete form W-4, a document that helps keep track of personal allowances. The more allowances workers have, the less taxes are taken out of their paycheck.
Find Employer Identification Numbers
You need to have a federal Employer Identification Number (EIN) ready. This is like an SSN (Social Security Number) for your business and is used by the Internal Revenue Service to identify a business entity. Mate you may also need to get a state EIN number.
Decide on Your Payroll Schedule
Employee pay dates, tax filing deadlines, and tax payments due dates are important for your business calendar pay schedule.
Calculating and Withholding Income Taxes
When you need to pay your employees, you need to determine which state and federal taxes to withhold, as you need to keep track of the employee and employer portion of your payroll taxes.
Paying Your Payroll Taxes
You need to submit federal state and local tax deposits as necessary, which is usually on monthly basis.
File Tax Forms and Employee W-2s
You will need to send in your employer federal tax return and any state or local tax returns as applicable.
Are Payroll Companies Profitable?
Payroll companies can be profitable and make money by providing payroll services. Payroll companies can be invaluable because they allow managers to focus on key tasks while reducing labor expenses.
Can I Put Myself on Payroll?
When running a small business, you can put yourself on a company payroll by paying yourself in the form of a salary from the owner’s draw.
How Do I Pay Myself as a Small Business Owner?
There are two main ways to pay yourself as business owners: salary and owners draw.
You could pay yourself a salary like salaried employees and withhold taxes from your paycheck. This is a legal requirement for businesses that are either structured as S-corporations, C-corporations, or a limited liability company taxed as a corporation.
You could also pay yourself under owner’s draw, where you draw money out from the profit of your business on an as-needed basis. You can draw up to the amount that you would put into the company, known as owner’s equity. Doing this means you wouldn’t have to pay payroll taxes upfront when you take a draw, but this does mean you will need to budget for your tax bill.
It is possible to process payroll by yourself, but you must remember that there is a lot to consider in the grand scheme of things. If you are trying to do your own payroll taxes, you may benefit from additional help, such as a payroll provider or an online payroll service to provide invaluable support within the payroll system. Alternatively, you can make use of a powerful payroll software like Buddy Punch.
Try Buddy Punch Free
If you’ve decided that a payroll software would make it easy for you to handle payroll on your own, you can sign up for a 14-day free trial of Buddy Punch here. You can also book a one-on-one demo, or view a pre-recorded demo video to see Buddy Punch’s other employee management features (such as time tracking and employee scheduling).
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