Payroll basics for employers

Apr 2, 2017 by

Payroll basics for employers

After hiring your first employees, you want to find the optimal way to pay them. If you’re new to payroll you need to get yourself familiar with new terminology like pay periods, unemployment taxes…etc. These are the basics that every employer should know before embarking in their payroll journey.

No need to feel so overwhelmed with all the new informations and the jargon. This is a quick guide and serves as an introduction, but it is in no way exhaustive. So for specific concerns it is better to consult a professional. This guide should, however, get you started with the basics that every employer should know.


Pay periods and paydays


Deciding your pay schedule is the first thing that should come to your mind. The pay period is when your employees are paid for certain days at work. Your pay period is delimited by the beginning and ending of this schedule. This includes weekly, biweekly and semi-monthly periods.

The date on which the employees are paid is payday. It is a fixed number of days after the end of the pay period. The payday is used, in taxing, to determine when you need to pay and file payroll taxes.


Collecting employee and employer taxes

There are two parties that we should consider when it comes to payroll taxes : employees and employers. Employers have to pay taxes on wages, usually for the federal government and the state. Sometimes additional taxes are paid to cities and municipalities.

It is employers who need to collect federal income tax, Social Security, and medical taxes from employees’ paychecks. Social Security and Medical tax are paid by the employees. Some details and additional taxes may be different depending on the exact law of your place of business.


Paying and filing taxes

Generally, the federal and income taxes are paid monthly. Other type of taxes are paid quarterly. But it may depend on the size of your business. You may receive notification from the state and federal government that you need to pay taxes more often. You also need to file some forms when you’re paying employees. Federal form must be filled each quarter. Most payroll services can handle such filing for you.


Federal, state, and local laws


You should be familiar with the employment law of your area. You need to adhere to state, federal, and local labor and employment laws. This is important so you can establish minimal wage, premium pay for overtime, and laws concerning the protection for children. There are informational websites that you can research and familiarize yourself with such laws.



You must keep track of the hours worked for hourly employees. A payroll timekeeper is usually used to compile data from time sheets. This data is then computed and wages are determined after deducting taxes. The timekeeper must verify the attendance of each employee by examining sheets that show the start and finish time.

These basics of payroll should get you started in understanding some basic terminology. But for detailed informations it in necessary to consult a professional.

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