The average small business owner spends more than 40 hours on tax preparation. And, like it or not, without good bookkeeping and payroll management processes in place, tax prep can take a lot longer.
Sure, you could always outsource your bookkeeping, but that puts strain on your budget. Keeping things in-house can be cheaper as long as you find a way to speed up the task.
But where do you even start?
We’ve got you covered. Here are a few simple tips to help you streamline your bookkeeping and manage payroll with ease.
1. Get Paperwork in Order
Before employees start working for you, you need to figure out how to classify them. Are they freelancing for you or did you hire them on for a full or part-time position at your studio or agency?
Contract employees require a 1099 form while full and part-time employees need to fill out a W-4 prior to their first shift.
These forms tell the IRS who is responsible for certain taxes and can impact your end-of-year bookkeeping if you don’t have them filled out.
Once the employees fill out their new hire paperwork, keep a copy of it on-hand. This way, you’ll have everything you need to process taxes at the end of the year and can better manage your payroll process.
2. Make Use of Software Tools
Just because you’re handling payroll on your own doesn’t mean you have to do everything the hard way.
Make use of bookkeeping software to track expenses, wages, taxes, and other information. This will simplify your filing process and makes it easier for your accountant if you let someone else file taxes for the business.
You can also use an online paystub maker and W-2 generator to further speed up the process.
3. Keep Track of Everything
Anytime you make a payment to the IRS, pay wages, or make changes to an employee’s wage, keep track of it.
When in doubt, it’s better to have too much information when preparing taxes than too little. Even if a change seems unimportant, make a note of it. The last thing any business wants is to deal with inaccuracies on their taxes.
4. Set Aside Dedicated Payroll Hours Each Week
The payroll process takes time. And if you’re handling it on your own, you need to set aside time each week to take care of those tasks.
When you’re writing the schedule, set aside at least a few hours to go over bookkeeping and payroll each week. Make sure to stick to the schedule.
This way, you’ll always stay on top of the tasks and won’t have to rush through everything to make sure your team gets paid every two weeks.
5. Stay on Top of Payments to the IRS
As a business owner, you need to make quarterly payments to the IRS. Falling behind on those payments or missing them entirely puts you at risk for fines.
Make note of important payment dates on your calendar and make sure to send the payments in full each quarter.
Manage Payroll Successfully
No one enjoys bookkeeping and payroll. But these tips will help you manage payroll without increasing your stress level or taking time away from other more important tasks.
When you’re a creative person, taking care of the mundane tasks is a major chore. But it doesn’t have to be. You just have to find the system that works best for you. For helpful tips on how to keep your business running successfully, read more here.