How to Run Payroll in 4 Easy Steps

RUN PAYROLLIn Just 4 Steps!

If you're a business owner,

here's the bottom line:

You've got torun payroll.

Running payroll is more complicated than it

sounds, especially as a small business owner.

Follow these 4 steps toget your payroll program

off the ground.

STEP ONE:Getting Ready to Run Payroll

To run payroll, you need your state new employer

information to register your business.

Use our handy map to find theinformation for your state!

FIND MY INFO

Once you've registered your business, you'll get afederal employer identification number (FEIN). 

You use the FEIN to pay employer payrolltaxes. You'll also enroll in electronic paymentsystems for federal and state payroll taxes.

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Don't forget to collect employee

information! You'll need:

Pay rate or salary

Hours worked

Time‐off taken

STEP TWO:Calculating Payroll Amounts

To calculate how much to pay employees, ask:

Is the employee hourly or salaried? 

Are they eligible for overtime pay?

Once you've answered these questions for

each employee, follow these formulas to

calculate payroll amounts:

HOURLY EMPLOYEESCALCULATION

# of HoursWorked

Pay Rate

GrossPay=

SALARIED EMPLOYEESCALCULATION

Annual Salary

# of Pay Periods

per Year

GrossPay=

OVERTIME CALCULATION

Pay Rate

x 1.5

Overtime Pay=

# OT hours

worked( )

STEP THREE:Payroll Taxes & Other

Deductions

You need to deduct payroll taxes

(income tax, Social Security,

Medicare) from employee pay.

Read this to get the fullexplainer on payroll taxes!

READ NOW

Depending on your employee benefits

package, you may need to take other

deductions from your employee's paycheck.

Other deductions could include:

Health Insurance

401(k) Deductions

STEP FOUR:Paying Your Employees

To calculate exactly how much to put on youremployee's paycheck, follow this formula:

Payroll Taxes +

Other Deductions

Net Pay=

GrossPay ( )

*

* a.k.a. the amount you put on the paycheck

Once you've calculated your

employee's net pay,

you're ready to pay them!

You can pay employees using either

paper checks or direct deposit.

CONGRATULATIONS!You just ran payroll in 4 steps!

(Now, go celebrate with some ice cream.)

Learn how to avoidthe most commonpayroll errors:

DOWNLOAD NOW

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