Payroll is the keeping and organization of a business's financial records. These records include information on employee salaries, deductions, and bonuses. Payroll is so important because it directly affects the net income of a business. It's a precise science figuring out how much to give out depending on what you're taking in, and it's not something to be taken lightly due to the extreme penalties that come along with payroll errors.
The main purpose of payroll is to make sure all employees are paid on time and the correct amount, including the correct withholdings and deductions.
There are quite a few rules and regulations that come along with payroll. In America, a company's payroll is subject to local, state, and federal regulations. One of those rules being that businesses are required to withhold a certain amount of an employee's paycheck for income taxes. Keep in mind that payroll taxes are different than income taxes even though they are both taxed on employers in relation to salary. Income and payroll taxes collected via deductions are known as trust fund taxes because the business owner keeps the deducted money in trust for payment at a later time. Additionally, small business owners must withhold a certain amount for such tax agencies as: Social Security, Medicare, Federal Income, State Income tax, city taxes, county taxes, state disability, school taxes, and unemployment insurance.
Payroll is also important for the overall morale of your business. Employees tend to take notice of payroll errors or differences in payroll. To keep your employee spirits high, pay close attention to your payroll.
Lots of small business owners choose to use an outside payroll service. Outsourcing your payroll can save your business time and money, and guarantee that your payroll gets done right.
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