Were you aware that processing online payments can be done in seconds?
Avoiding late payments is something that many businesses struggle with, especially smaller ones. While many businesses hire people to handle payments, it can be difficult to ensure that everyone is getting paid properly unless you use an automatic system.
Online payment systems are designed to help employers make payments efficiently without mistakes. When using one, you can enter employee information and set up pay periods so that payments are sent automatically. This will help you save both time and money because you won’t need to hire anyone.
Keep on reading to learn more about how to set up an online payment system!
Obtain an Employer Identification Number
When it comes to processing online payments, one of the first things you must do is obtain an employer identification number (EIN). This number allows the government to monitor your business and keep track of taxes.
Without an EIN, you cannot legally operate the business, which will make it difficult to set up the payment system. Fortunately, you can apply for an EIN with the IRS in minutes.
Understand What an Employee Is
Many employers don’t understand the difference between an independent contractor and an employee. However, knowing what they are is crucial because they both affect the way you’ll handle payments.
The main difference is that an independent contractor is their own boss, so they handle taxes themselves. As a business, you will not withhold taxes from them.
Regular employees dohave their taxes withheld by the employer. They’re also covered by labor laws, so you’ll be expected to provide things like workers’ compensation, minimum wage, etc.
If you’re hiring independent contractors, you’ll need to figure out how they’ll be paid. Employees earn either an hourly rate or salary, but there isn’t a specific way you must may contractors.
Any time you pay an employee or contractor, you must provide them with the proper tax forms. Employees will get W-2 forms whereas independent contractors will get a 1099.
Before giving W-2s to employees, you must file W-4 forms. Employees will fill these out so that you can ensure you’ll withhold the proper amount. After receiving the W-4s, you can provide the W-2s that show employees how much you’ve withheld.
Come Up with Compensation Terms
Making payments online isn’t a difficult process, but things can get trickier with a plethora of employees that earn different amounts. Things can get even more confusing when hiring independent contractors because you must negotiate a contract.
Before you start processing online payments, figure out how much you’ll pay employees and how often. Decide whether you’ll pay weekly, bi-weekly, or monthly. You must also determine whether they’ll get paid an hourly rate or salaries.
When negotiating a contract with a contractor, they’ll most likely tell you how much they charge for a task. Ensure that come up with a specific date in which you’ll pay them.
You should also figure out whether you’ll pay them partially before the contract is up or entirely after the project is complete. For example, if you hire a contractor for 3 months, will you pay them each month or only after the 3 months have ended?
Keep in mind that you must also consider providing retirement plans and health plans. If employees choose to opt into these programs, you can withhold more money from their checks.
Choose an Online Payment System
One of the last things you must do when setting up an online payment system chooses one. If you visit a site like www.quickpayportal.com, you’ll see that they offer an online portal that can quickly be accessed by anyone that needs to make a payment.
When using an online payment system, you can automatically send payments to all employees and contractors. If you’re working with both, you may want to use 2 different systems. However, everything you need can be accessed from one.
To find an online payment system, look online. You’ll see a variety of sites offering various types of payment systems, so go through several.
If you need to pay independent contractors, you can use a service like PayPal to send payments within seconds. The main benefit of using this service is that you can create a list of people to send mass payments.
After you begin making payments online, all you must do is document everything. Not only will this make taxes easier, but it’ll also ensure that you’re paying employees properly. With tax documents, you can follow the Employer’s Tax Guide to determine how much you should be withholding from their pay.
You should also document all W-4s and other tax forms for active employees. Sodapdf can help you make document work easier. If an employee is terminated, keep the documents for a few years to avoid running into problems if you’re asked to produce them. If the government ever wants to see documents relating to the payments, you can quickly produce them.
Start Using an Online Payment System Today
Now that you’ve read this article, you have a better idea of what an online payment system is and how to set it up. Anyone that runs a business must use one if they’d like to pay employees properly.
Whether you work with employees or independent contractors, we encourage you to start looking for a payment system as soon as possible. When using one, you’ll see that it takes nothing but a list of recipients to send the payments.
Check out our other articles to learn more about business!