Livermore, CA – A Quick Guide to Calculating Payroll from a Local Provider

Local experts provide payroll calculation tips

Many small business owners don’t realize all of the “other stuff” which accompanies starting a company.

Along with ensuring the delivery of a great product or service, these new owners have an entirely new set of duties to keep the business afloat such as payroll, human resources, insurance and several other items.

Our company has been helping businesses of all sizes deal with the “other stuff” for several years, and our goal is to give owners back the time they need to ensure their company is successful.

We help businesses across the country with payroll, HR, workers comp, labor law compliance, point-of-sale solutions and more, and we’re based right here in the Bay Area.

If you are a new business owner and/or need some pointers on ensuring your payroll is calculated correctly, we created this simple guide as a way to help.

The first step in calculating payroll is to determine the total time worked in the pay period for non-exempt salaried employees and hourly employees. Whether you use standard timesheets or time and attendance software, ensuring a proper account of hours worked is the first step in a successful payroll operation.

Once the total number of hours is tabulated, next it’s time to calculate pay before taxes, or gross pay. Gross pay is simply the number of hours worked multiplied by an hourly rate, plus overtime. Exempt salaried employees are not eligible for overtime, but non-exempt salaried employees are. Be sure your new hire paperwork covers this for anyone on salary.

Next, it’s time to determine deductions from gross pay. These consist of non-taxed items such as a retirement plan, wage garnishments and insurance premiums and tax deductions to federal, state and local government plus medicare and social security.

Deducting the correct amounts for taxes is key, and it’s essential to know the correct federal, state and local tax rates along with withholding information for each individual employee. As your company grows and more people join your team, keeping track of this information might become more difficult.

Finally, you are able to calculate an employee’s paycheck amount by subtracting pre-tax and tax amounts from the gross pay.

As an employer, you must remit the withheld tax amounts to the appropriate agencies per employee, but you also must pay employer taxes. These include FICA taxes (social security and medicare), workers comp and unemployment insurance.

Relying on spreadsheets for these complex calculations leaves a large margin for error, and mistakes can lead to possible lawsuits and/or trouble with the IRS.

Payroll calculations can take up time and resources from any business, which is why so many companies enlist the help of payroll experts to handle this task for them.

If you want to take control of your business and delegate administrative tasks like payroll, human resources and more to an experienced team, we would be happy to examine the needs of your business and partner with you.

Give us a call today and we can help you get back to focusing on the important things while we keep your company compliant and your employees paid on time.