Banking and Finance

Employer Tax Information: An Owner’s Guide to Payroll

Employer Tax Information: An Owner's Guide to Payroll

More than 40 percent of small businesses have been at risk of not being able to pay employees on payday. Hiring new staff is a considerable expense for a small business, and it can seriously impact your cash flow.

Here are a few things you need to know about employer tax responsibilities, including tax remittances and the government requirements.

Do Your Research

If you’ve started a business, you may be ready to take things to the next level by hiring some help. Consider this, though. Hiring employees means you need to know how to do payroll properly.

When you prepare payroll, you have several responsibilities.

  • Gather information from your employees
  • Calculate income and other employment taxes
  • Deduct these amounts from employees
  • Calculate employer tax amounts and set aside
  • Prepare reports and remit all taxes on time
  • Prepare and file annual tax reporting slips for each employee

There may be state or other taxes and reporting to prepare, depending on your location. Understanding payroll taxes and remittances are one of the most complicated parts of hiring an employee. The quicker you get up to speed, the better for your business and its future.

Automate the Calculation

If you try to calculate your payroll manually, it will add to your stress and increase the likelihood of errors. Payroll software will have a built-in payroll calculator that will make the correct deductions from each employee’s pay. Examine your payroll needs and compare the features of several software packages before you select one.

Use a Separate Bank Account

It’s easier to process all of your payroll-related transactions, including medicare tax, through a business account that is separate from your operating account. This allows you to manage your cash flow and set aside the right amounts to meet your payroll obligations on time.

If you use direct deposit to pay your employees, you won’t have to spend the time manually preparing payroll checks for each person. Your bank reconciliation will be much easier because there will be fewer outstanding checks to track. This reduces the amount of time at the end of each month.

A Payroll Service Is Worth It

When you consider the time it takes to prepare employee paychecks for each pay period, hiring an expert may be worth the cost. They can file taxes on your behalf. If you don’t make the correct tax deductions or fail to remit payroll taxes to the government on time, your business can incur penalties and interest.

Learn more about payroll services at www.payrollserviceaustralia.com.au. They have the knowledge and expertise to make the proper deductions, and you won’t have to spend time figuring out a complicated tax system.

Understand Employer Tax Responsibilities

There are a lot of things you can do to gain an understanding of employer tax responsibilities. When you put in the work, you’ll be able to make the correct calculations and meet the required deadlines.

Did this article help you understand the ins and outs of the payroll preparation process? If so, use the search feature to find more information to help your business grow.

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