Congratulations! You’ve started your own cleaning business and now are a self-employed business owner.
What do you do next? One of the things you need to figure out is how to pay your employees. Fortunately, doing cleaning company payroll is easier than you might think.
While there are a few steps involved, the process is simple. Once it’s all set up, it should be easy to keep running. Keep reading to learn more about how to pay your employees.
1. Find Cleaning Company Payroll Software
Although you can certainly do payroll without software, it’s significantly easier if you use a program that’s designed for cleaning companies or else small businesses like yours.
There are many options to choose from, including some free ones, so you’ll be sure to find one that works for you.
2. Get W-4’s from Your Employees
The next thing you need to do is have each of your employees fill out a W-4. This form is how tax withholdings and allowances are calculated for each employee. Be sure to get the updated 2020 version.
In the future, you’ll want to have each new employee fill one of these out upon hiring. This will make this step far easier in the future since you’ll only have to do one at a time instead of one for each of your current employees.
3. Get an EIN
If you haven’t already done so, register with the IRS to get an Employer Identification Number (EIN). This number acts like a social security number for your business. It’s used to keep track of your taxes and you’ll need it every time you file.
Applying is easy because you can do it online. Just check to see that you’re eligible for an EIN. Then, fill out and submit the form and you will have one shortly. Now you can use this on all of your tax-related forms.
4. Get Insurance
There are several types of insurance you need for your cleaning company. Let’s quickly look at the three most important ones to have.
This may also be referred to as commercial liability or slip and fall insurance. It protects your business against financial damages in a few different situations. This includes:
- Damage that occurs to your client’s home or property
- Bodily injury to clients because of your workers
- Lawsuits filed against your company
An example of when this would come into play is if a client’s television was knocked over during routine cleaning. Your client would then be compensated for the loss by your insurance company.
This type of insurance is so important some states require your business to have it. Workers’ compensation covers expenses caused by employees being injured while working.
If an employee falls while cleaning and ends up at urgent care, for example, worker’s compensation would cover her medical bills and lost wages. It will also cover legal fees should an employee try to sue you because of an injury.
To protect your business possessions, you need property insurance. It covers your building, any furniture you have, and your business equipment from damage or loss as a result of vandalism, theft, and various accidents.
If you want to save money, consider getting a business owner’s policy that combines property insurance with general liability insurance.
5. Determine a Payment Schedule
As a business owner, one of the decisions you’ll have to make is how often you’ll pay your employees. Most often, employers opt to pay their employees weekly or bi-weekly on the same day each time.
You’ll also need to decide if you’re going to pay your employees a salary, by the hour, or by the job. Figure out what will work best for your business and your employees before you make this decision.
6. Figure Out Taxes and Withholdings
Next, you need to figure out what taxes you need to pay and what else you may be entitled to withhold from your employees’ paychecks. If you’re using payroll software, this will be done for you based on your location.
If you’re not using a program designed for this purpose, you’ll have to look up what federal, state, and local taxes you owe. These will get removed from the gross pay of each employee.
Things like insurance and retirement plans within your company may also be withheld from your employees’ paychecks. These are things you’ll have to calculate yourself because they’ll be different for every person and business.
7. Pay Your Taxes
Once your business starts rolling, you’ll have to pay taxes to the federal, state, and possibly local governments. Check with each to determine how much you owe them and how often you have to pay them.
Typically, you’ll have to pay these taxes on a monthly basis, so it’s important you’re setting that money aside every time you do payroll for your employees. This will prevent struggles every time taxes are due since you’ll already have the money ready.
It’s also important to keep in mind that you’ll also have to pay business taxes along with your employees’ income taxes. Find out what you have to pay based on your specific situation, and set this money aside as well.
8. File Taxes and W-2 Forms
The last thing you’ll have to do is file your business taxes. For most businesses, this has to be done every quarter and then at the end of the year as well. Check with your area to see how often your state and local taxes need to be filed since this will vary.
You’ll also have to file W-2 forms for each of your employees at the end of the year. This is what allows them to file their taxes. You’ll typically have until the end of February to send these out, but it varies so be sure to check or plan on getting them out as soon as possible.
Sending out W-2 forms is something else that’s significantly easier when you use a payroll software program. Some programs will do all the work for you but charge a fee per W-2. Others will walk you through it so it’s easy and won’t charge you.
Need More Business Tips?
Now you know how to set up cleaning company payroll so you can ensure you’re paying your employees and keep track of taxes. As you can see, this will keep you in good standing with your workers and the government.
If you want more tips to help you run a successful cleaning business, keep reading our blog. It’s packed with helpful information, like our post with ten secrets that will grow your business.