Step 7: Get Your Payroll Up and Running: Consistent and Accurate, Every Time.

Bridging the Gap: From Bookkeeping to Payroll

Now that you’ve set up a structured bookkeeping system, the next crucial step is managing payroll. Payroll isn’t just about paying employees—it’s about ensuring compliance, tracking tax obligations, and maintaining trust with your employees and accurate financial records for your business. A well-managed payroll system integrates seamlessly with your bookkeeping, reducing errors and improving financial forecasting.

What Payroll Is & Why It Matters

Payroll is the process of compensating employees, calculating wages, withholding taxes, and ensuring compliance with federal, state, and local regulations. Getting payroll right is critical for:

• Employee satisfaction – Timely, accurate pay builds trust and retention.
• Legal compliance – Mistakes can lead to IRS penalties and legal trouble.
• Financial stability – Payroll is one of the largest business expenses and must be carefully managed.

How to Set Up Payroll

1. Get an EIN (Employer Identification Number) – Required for tax reporting.
2. Classify Employees Correctly – Employee vs. contractor misclassification can result in legal issues.
3. Set Up Payroll Software or Service – Choose a system that integrates with your bookkeeping.
4. Establish a Pay Schedule – Weekly, biweekly, or monthly, ensuring compliance with state laws and competitive labor practices.
5. Withhold & Pay Taxes – Federal, state, and local taxes must be calculated and paid on time.
6. File Payroll Reports – Regular filings with the IRS and state agencies are mandatory.
7. Keep Detailed Payroll Records – Maintain records for audits and compliance.

Risks of Getting Payroll Wrong

• IRS Penalties – Late or incorrect tax filings can result in penalties, fines, and interest.
• Employee Disputes – Errors in paychecks lead to dissatisfaction, employee churn, reputational damage and potential lawsuits.
• Cash Flow Problems – Poor payroll management can cause financial strain.
• Compliance Violations – Failure to adhere to wage laws can lead to audits and legal action.

Common Payroll Mistakes to Avoid

-Misclassifying employees as independent contractors.
-Failing to set aside payroll taxes.
-Missing payroll tax deadlines.
-Using outdated payroll software that doesn’t integrate with accounting.
-Neglecting to track overtime and wage compliance.

Top Payroll Providers to Get Started

Choosing the right payroll service ensures efficiency, compliance, and peace of mind. Here are some of the most trusted payroll software solutions:

Quickbooks https://quickbooks.intuit.com/payroll/pricing/

Gusto https://gusto.com/product/price

ADP https://www.adp.com/what-we-offer/payroll/payroll-for-1-49-employees.aspx

Or you work with a professional service provider like ADC & Co. to have a trusted partner ensure timely and accurate payroll for you and your team. Set up a Discovery Call here to learn more!