If your business has any employees, you’re not only responsible for issuing paychecks on a set schedule, but also for deducting and paying all applicable federal, state, and local income taxes to the government. Some people are intimidated by this responsibility, but the truth is that once you have a payroll system in place, it’s not that difficult to keep it running smoothly, especially with the help of your accountant. Here are the steps you should take to set up a system that will streamline the process.
Apply for an Employer Identification Number
An Employer Identification Number (EIN) identifies you as a business entity that’s responsible for paying payroll taxes to the government. According to the IRS, if you have employees (not just independent contractors), you’ll need to apply for one. To do so, go to the IRS website and print out Form SS-4 [PDF] if you plan to submit it by mail or fax. If you are an international applicant, you can apply by phone. You can also complete and submit the form online.
Learn Your State's Withholding Requirements
In addition, some states require that you withhold state income tax, disability, or unemployment taxes from your employees' paychecks. Your state may require their own, separate, employer number and also an Account Number for unemployment purposes. The IRS offers a list of all state government offices where you can find your state’s requirements. Your accountant will be able to help with any questions or concerns you have with this process.
Get the Required Paperwork from Employees
You’ll need to have each of your employees fill out a Federal Income Tax Withholding form W-4 [PDF]. This will allow you to withhold the right amount of income tax from their paychecks.
Decide How Often You’ll Pay Employees
Next, you’ll need to decide how often to pay your employees. In addition to what’s convenient for you, you’ll need to adhere to your state's laws. (Every state has laws that determine how long you can go in between paychecks.) The typical pay schedule is every week, or every-other week.
Choose Your System
Next, you’ll need to decide which type of payroll system to use. Many business owners choose to calculate and record their payroll themselves manually. This option may seem lucrative, as it is the cheapest method, but it is also the most labor intensive and the most prone to error, leading to headaches during tax season and possible fines from the IRS.
Using an online payroll service saves time and makes it easier to track important details such as employee hours, overtime, vacations, health care premium deductions and retirement contributions. In addition, the online system calculates the amount of the paycheck and tax withholdings, files the required tax forms, and pays your payroll taxes.
If you’re like most small-business owners, time is your most valuable asset -- which is why many choose to completely outsource their payroll system to an accountant. Hiring an accountant to handle your payroll takes all calculations, reporting, and check issuing off of your plate and allows you to focus on other more pressing matters.
Run the Payroll
After you’ve set up your system, you’re ready to run payroll. If you use a desktop software program, you’ll have to enter the required information and print out the checks. If you choose an online payroll service, you simply enter the hours, and then either print the checks yourself or use the free direct-deposit feature. All that’s left is to report the payroll taxes to the appropriate tax agencies, paying them within the required time period. If you have chosen to outsource your payroll to an accountant, the process will run without you having to worry about it. All checks or direct-deposits will go out, plus all payroll taxes will be reported and paid within the required time period.
By Andrew Keyt
Mon, 2015-06-15 15:20
A person born into a family business is a person born into a story—one that’s ongoing and generations old. Like any good story, there are heroes: parents, grandparents and great-grandparents, whose legacy, mythologized over time, casts a long shadow. This shadow weighs heavy on the next generation. Do I have what it takes? Will I be a great a leader or will I fail? The expectation to succeed, to live up to the past and honor its heroes… even the most resilient successor can be crushed by the pressure.
There are other obstacles, too. The myths of leadership. Idioms and phrases that at first, sound wise but at heart are akin to nonsense. For example, “leaders are born and not made.” How shortsighted to think that there’s only one iconic style of leadership bestowed upon a lucky few. That leadership is what? Somehow given to a person at birth, like some fairy godmother’s spell? Myths like these slowly chip away at successors and, like the weight of the family shadow, can undermine their confidence, capability and talent.
The topic of succession is one I hold near and dear. For almost 20 years, I’ve watched graduates from our Next Generation Leadership Institute go on to become confident and successful leaders within their family business. I’ve also had the fortune of interviewing 28 family business successors, all chronicled in my book, Myths and Mortals: Family Business Leadership and Succession Planning. All of these experiences have brought me to this understanding: that while it’s true we’re all born with certain leadership traits, those we lack can be developed and strengthened through hard work and education.
When on the road to becoming a successor to a family business, here are some traits to consider.
A successful successor is aware of their strengths and weaknesses and leverages their strengths for the good of the family and the business.
Belief in Oneself
The family shadow can lead them to believe that credibility and worth comes from their family name rather than individuality and identity. Successful successors aren’t afraid to make mistakes. Nor are they afraid to learn from these mistakes. This process teaches them to believe in themselves, while at the same time, building a personal record of achievement. Credibility must be built on personal and professional actions, not a family name.
Credibility with Others
Belief in oneself isn’t enough to become a successful successor; others must believe in them too. They’ll recognize a successor’s credibility in the same way a successor recognizes it within themselves: through actions, ability to lead and track record. Christie Hefner described it this way, “True power is given by the people that you lead, not by the people who gave you the job.”
Clear Sense of Values
Successful successors reflect on their parents’ values and, in turn, establish their own set of values. Some may be shared with parents, while others may be unique to them. Think of values as a map; they keep the business on a set course. When we reach a fork in the road, values help us decide which path to follow.
Successful successors are skilled problem solvers. They know how to make difficult decisions and act decisively for the betterment of the family and the business. Laying off parts of the workforce, for example, can be an extremely difficult decision, especially when employees feel like part of the family. But it’s a decision that sometimes must be made to keep the family business afloat.
Commitment to the Family
Survival isn’t just about money. Research shows that centuries-old family businesses have survived for so long, not because of financial success, but because of strong relationships. Families enjoy being together and have a sense of pride and commitment to each other and the business. Successful successors come to know that “we” is more important than “me.”
Commitment to People
Successors shouldn’t let their family shadow diminish contributions by employees, trusted advisors and other family members. Successful successors aren’t blinded by the shadow; instead, they shine a light on the contributions of others. (S)he should commit to the growth and development of his/her employees. Give credit where it’s due, celebrate success, admit mistakes and take responsibility when things go wrong.
Commitment to Continual Learning
Successful successors are life-long learners. They enjoy discovery and new perspectives, taking some initiative to learn and be curious.
Ability to Deal with Ambiguity
Leading in a family business is often fraught with uncertainty and ambiguity. There’s often no clear right or wrong. Successful successors are comfortable in this middle-zone; while others are paralyzed with indecision, they seek clarity.
Successors face many challenges; from the family shadow to the myths of leadership, overcoming these challenges is no easy feat. A successor will need to make a concerted effort to strengthen their leadership traits over time so they can build a legacy larger than themselves.
Source URL: http://wealthmanagement.com/family-business/key-leadership-traits-family-business-successors