How to set up employee payroll in 6 steps: Free template and guide
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It is mandatory that every company in Nigeria pays its employees. This is done using an employee payroll. The typical Nigerian employer is not a Certified Public Accountant therefore he/she would require instructions on creating Nigerian employee payroll.
There are a few solutions available to small business owners and managers for creating and managing payroll. They can either use payroll software or online payroll service to automate some payments or outsource this to an accountant to help or do it by themselves with a combination of tools and templates.
This article contains information on how to set up an employee payroll including a free template for setting up employee payroll.
How to Set up a Payroll in 6 Easy Steps
Before paying employees their net salary, a company must subtract the regular Pay-As-You-Earn and pension contributions. and this must be included on the employee payroll.
Here is how you can set up your employee’s payroll in seven steps
To get started, register for an EIN with the IRS.
This number is provided by the IRS so that it can recognize your company. You must file for an EIN if your company is new. On the IRS website, you can read about how to apply for an EIN and get additional details regarding the EIN program and procedure.
The IRS recommends that you submit your application online, but you can also do so by fax or mail. Applying is free. Those from abroad can also apply by phone. If accepted, online applications instantly assign an EIN, as opposed to fax and postal applications, which take four business days or one month, respectively.
Make sure each employee fills out a W-4 form.
Employees must submit Form W-4 to verify their filing status, manage personal allowances, and get payment. Payroll taxes are deducted from employees’ paychecks on a per-pay period basis in proportion to the number of allowances or dependents they have. You must submit a new hire report for each new employee you recruit. The Form W-4 has changed for the current year, therefore you should start having new recruits complete it at the start of the calendar year.
Research the business requirements in your state.
Along with obtaining a federal EIN, you might also need to register your company with your state and obtain a state ID number. You’ll use this number to submit your state income and employment tax returns (nine states have no state income tax). The Small Business Administration’s state-by-state website can be used to determine whether you require a state ID number. While doing so, ask a lawyer or accountant if you need to apply for unemployment insurance and state withholding accounts.
Establish an employee Payroll Schedule.
A payroll schedule is a calendar that displays how frequently an employer pays its staff. While some small businesses prefer to send direct payments to their employees on a weekly or biweekly basis, others decide to do so on a semi-monthly or monthly basis. The wisest course of action would be for you to avoid selecting a payroll schedule at random. Check the applicable legislation first to see whether there are any special rules governing how frequently you may pay your staff. Your company’s cash flow is another aspect of this.
Select a payroll system, then choose a payroll manager.
This is one of the crucial steps. You, as a business owner, must choose whether to manage your employee payroll yourself using payroll software or by contracting with a payroll service provider. You have access to a variety of payroll software alternatives that enable you to automate payroll inputs, submit quarterly tax returns, and maintain legal compliance. You can outsource these Payroll services to independent contractors who will help manage the whole payroll process.
File employee W-2s and tax forms
Last but not least, remember to submit your employer’s federal tax return (often every quarter) as well as any necessary state or local taxes. Last but not least, remember to prepare your W-2s and yearly files before the end of the year.
Here is how you can set up your employee’s payroll in seven steps
Free Employee Payroll template
Payroll processing on your own may be challenging, so if you’re doing it for the first time, it’s essential to speak with a professional before you begin or use a template.
What you might miss is the complexity of processing your payroll. For instance, you can put your company at risk if you enter deductions erroneously or file payroll taxes inaccurately.
You can find fifteen payroll templates here.
Because a template includes filled information like tax rates and overtime formulae, using one can save time and increase efficiency. You just need to enter the actual hours worked after entering your employee information; the template will then generate the necessary payroll data automatically.
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