15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
15760 Ventura Blvd, Suite 610 Encino, CA 91436
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Preparing and Managing Small Business Payroll

Accounting for payroll is a fact of life for businesses of all sizes. Every business has to pay its employees, and, for tax purposes, keep track of how much those payments are. However, payroll accounting is often a lot more complicated than that. While many smallCalculator and diagram businesses use a third party to manage their payroll, if you want to try it yourself here are some basics to keep in mind.

Recording Wages

Money paid to an employees is recorded in several different ways. Some employees receive hourly pay which ought to be recorded in the form of a time card, while others receive a salary regardless of how much time they worked during a pay period. Bonuses and commissions should also be recorded by payroll, but since they are taxed differently a large part of accounting for payroll is keeping track of these different payment methods.

Employee Benefits

Employee benefits are things like Social Security and Medicare. Most of the time, employees will pay half of these costs out of their salary or wages, and then the employer will match these amounts out of their payroll. It may be easier to think of these benefit payments as part of the employee’s salary, even though they go directly to the government and the employee cannot touch them. However, benefit information should be recorded separately from wages or salaries.

Payroll Taxes

At the end of the year, payroll numbers need to be reported to the IRS, state, and local tax agencies. The employer is expected to issue W-2 forms and other relevant documents to employees, and report employee earnings to the IRS so that both can prepare their taxes for the year. This is when having an accurate payroll is most important, because errors can mean an audit from the government.

Hiring a professional to manage accounting for payroll can save a lot of stress and headache, as well as cutting down on errors that can cause trouble with the IRS later on.