Becoming An Employer? 3 Key Tips For Keeping Accurate Accounts

As you take on employees, your responsibilities as an employer are about to multiply. With so much oversight and regulations around the hiring of employees, their work and payment, and their termination, it's more important than ever that you understand how to keep the best books and fulfill all your legal requirements. To help you with this sometimes daunting task, here are a few key accounting tips for new employers. 

1. Separate Taxes and Compensation

Basically, an employer pays for an employee both in what is given directly to the employee and what is also remitted to the government agencies. Both compensation to the employee and taxes or fees beyond that must be tracked separately and paid to the right persons or agencies in the right amounts.

The only way to ensure proper payments is to track these costs separately within your own records. Create separate accounts in your books for salary and wages, certain benefits, state and federal income tax withholding, employee FICA, and employer FICA amounts. Avoid intermingling any of these costs. 

2. Learn About Deadlines

Each facet of payment involving employees generally has a different deadline. Some, such as how long you have before you must pay an employee who quits, are based largely on state rules. Other time frames, like when you must remit withholding or FICA taxes to the government, are made at the federal level.

Violating any of these deadlines can cost money in terms of fees and penalties. But, more importantly, it can open up your business to audits and additional examination. 

3. Balance Often

While you may not be required to confirm what is withheld or calculated for things like Social Security contributions, it's a good idea to do so regularly. Balancing your numbers each time you do payroll and each time you remit any money will keep you from having a mess at the end of the quarter or year. Ensure that each payroll cycle's taxes, remittances, withholding, and benefits are what they should be based on independent calculation. 

If you learn what needs to be tracked and paid, when you must pay it, and how to ensure accurate numbers, your accounts will be clean and simple. You will be able to have confidence that there aren't going to be any surprises. Want help setting up your books as an employer or maintaining it on a regular basis? Start today by making an appointment with a bookkeeping service with experience in your field.