How to Set Up Your Payroll – Part 2

December 24, 2024
Published by Gonzales Group CPA

While being in the position of having employees as a small business owner is an exciting step, there’s also a lot of paperwork and requirements. Last month we started on some of the initial steps you need to take, and this month we’ll finish up, focusing on various forms, documents and other employee-related aspects you’ll need. Of course, working with a San Antonio TX CPA like Gonzales Group can help take any stress out of this process.

First, you’ll need to collect employee information, which can be gathered from various documents they’ll need to fill out. The Form W-4 will help you determine the amount of federal taxes to withhold, based on their filing status and exemptions. While Texas does not require state tax withholding forms, other states do and it would be required for similar reasons as the W-4, for determining state taxes. If you offer direct deposit, you will also need the appropriate banking information for each employee.

Once you have the necessary information from your employees, it is time to do the calculations for taxes and withholdings for employees and your own required employer taxes. Federal tax withholdings are determined by the information in the W-4 Form. You will also need to determine the amount to withhold for each employee’s contribution to Social Security and Medicare taxes (FICA). Additionally, as the employer, you will need to pay the Federal Unemployment Tax (FUTA) for each employee. While there is software to determine these amounts, it’s important to make sure the software is up to date with any changes.

In addition, depending on your business, as an employer you will need to report and file tax information monthly or quarterly. This includes federal and state (if applicable) income taxes, Social Security, Medicare, and income tax withholdings. At the end of the year, you will also need to file Form W-2 with the IRS and each employee by January 31. This states the employee’s total earned wages, withheld taxes, and other payroll-related information that they will also need for filing their own taxes.

As an employer, you are required to keep payroll information for three years. This includes proof of filings, wage rates, hours worked, etc. You must also stay informed about any changes in tax requirements to avoid penalties. Clear and exact record keeping is vital.

Staying on top of all of this information, filings, and reporting can be a challenge when you’re starting out and trying to grow your business. This is why it’s a good idea to turn to experts like ours at the Gonzales Group, a San Antonio TX CPA. We help you stay accurate, up to date, and on schedule with every part of your payroll taxes. If you’re looking for help with this important task, contact us today.

Categorised in: Common Payroll Mistakes, How to Set Up Your Payroll - Part 2, San Antonio Tx Tips, Uncategorized

This post was written by Gonzales Group CPA