Top 5 Things to Know About Running Your Own Payroll


Congratulations! You’re a small business owner! One of the first things you’re probably thinking about is running payroll. Outsourcing payroll to a third-party provider will increase your monthly costs. Now there’s an alternative solution. With ADP, you can run your own affordable, fast, easy and reliable payroll completely online. Here’s 5 things you should know about running your own payroll.

You Hired an Employee, Now What?

Not to worry. After you hire a new employee, you will complete new hire reporting forms with your specific state agency. The agency will then confirm that your new hire is legally permitted to work in the US and provide them with the required tax forms to complete, such as the W-4, which specifies federal income tax withholding. You absolutely need this form completed to accurately withhold your employees’ taxes.

Know Your State and Federal Wage Laws

Having a basic knowledge of wage laws is an important part of payroll processing. Some states have adopted a higher minimum wage than federal law requires. If this pertains to you, the higher wage rate will apply. In addition, minimum wage laws also apply to tipped and exempt workers. In some states, employees must receive mandatory breaks and even receive payment on specific dates.

Remember Your Payroll Taxes!

One of the most important and primary responsibilities of being an Employer is paying your payroll taxes. As an employer, you must withhold and paying federal, state and local employee taxes along with your own tax liability. You must also report your taxes to the respective agency. If you fail to comply with tax regulations, major civil and criminal penalties may apply.

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Keeping It All Together

The Fair Labor Standards Act (FLSA) requires that you maintain certain records for both exempt and nonexempt employees. The FLSA also mandates how long records must be kept and where they need to be maintained. The documents you’re required to keep include, employment contracts, time cards and records that show deductions from and additions to wages. You also need to check with your state to see if they have record-keeping requirements as well.

ADP Payroll lets you keep all your records online, easily accessible to you 24/7.

Determining Exempt vs Non- Exempt Employee Status

The FLSA sets federal requirements for exempt employees, meaning they’re excluded from the act’s overtime pay provisions. Employees who are not excluded are called nonexempt, which means they qualify for overtime pay if they work more than 40 hours per week. If you confuse an employee’s classification, you may accidentally cause a misclassified employee to not receive the overtime pay he or she is entitled to. Typically, salaried employees are exempt while hourly employees are nonexempt.

It’s also important that you understand the differences between an employee and independent contractor. According to the IRS, an independent contractor is a self-employed person. An employee is paid through payroll, while an independent contractor is not. Incorrectly classifying an employee as an independent contractor can cause the employee to not receive certain benefits that they’re entitled to such as overtime, family/medical leave and unemployment insurance.

As you can see, running your Company’s payroll online is an easy process and can save you time and money. Your ADP Support team has your back, providing assistance whenever and wherever you need. With nearly 70 years in the business, ADP is your affordable, fast and easy online payroll solution.