April 12, 2024

Business Bib

Business & Finance Blog

What Does Payroll Mean? – What Do Small Business Owners Need to Know

3 min read

Are you trying to get the answer to “What does payroll mean?” Read this article to learn more about what payroll is and other important information.

Whether you’re a business owner looking to hire your first employee or looking to start your business, you need to know about payroll. What does payroll mean? In its very simplest form, payroll is the wages you pay your employees based upon their agreed-upon salary or an hourly wage.

There are many things that go into creating the payroll for your business. It’s likely you are unaware of many of them because you’ve never had to deal with it before.

Before you look for and hire your first employee, learn everything you need to do for their payroll. It’s important for you and them.

What Does Payroll Mean for Business Owners?

First and foremost, it is the responsibility of the business owner to calculate and distribute the payroll to employees. You can’t just give them a check and tell them to figure out healthcare, retirement and other deductions.

In order for each employee to know exactly what they made, what deductions were taken out and how many hours they worked, the employer provides a paystub like the ones from https://www.paystubcreator.net.

It’s important that both you and the employee have a copy of the paystub. It has all the information about payroll for that period.

Determine Everything You Need Before Hiring

When you hire someone, you agree to pay them for work done. Before hiring, determine how many hours they are expected to work each pay period and the wage or salary they’ll make.

You also need to determine the pay period. Will you pay them weekly, every two weeks, once a month, etc.?

Once you hire the employee, they need to fill out a W-4, so you know exactly how much state and federal income tax needs to be withheld. That’s also your responsibility.

Also, are you providing them vacation days, personal days, holidays, sick days, etc? This all comes together to create the overall picture of payroll. Much of it is also shown on the paystub for the employee to see as well.

Follow State and Federal Laws

There are state and federal laws designed to protect employees from predatory employers. You must familiarize yourself with them, so you follow them all to the letter.

If you don’t, then you could open yourself up for state or federal scrutiny, lawsuits, fines and more.

For example, if you have an hourly employee who worked 43 hours in a week, then you’re likely responsible for three hours of overtime pay. It may have been accidental such as you couldn’t come in because of a medical emergency and the employee covered for you, but you’re still responsible for paying the appropriate overtime pay.

You’ll Get the Hang of It

What does payroll mean? It means you’re responsible for paying your employees. It may seem daunting at first, but it’s part of every growing and thriving business.

Thankfully, there are plenty of computer programs available to help you with it. You’ll be an expert in no time. If you’re like to learn more about payroll and paystubs, then please explore our site.