Payroll

Payroll is usually one of the biggest problem areas for a person going into business. The reporting requirements are complex and the penalties for failure to comply are very stiff.  If you have fewer than 10 employees, it is usually cost effective to prepare you payroll manually.  The tools you will need are: payroll-withholding chart, a payroll book that allows you to record the person(s) being paid on an ongoing basis and the check.  You should keep in mind that each employee must be provided a record of his or her gross pay, the amount each deduction and the net pay each time you prepare payroll.  You must also comply with the requirements of the State and Federal wage and hour laws.

If you are going to have 10 or more employees it might be wise to consider having your payroll prepared by a commercial payroll service. These services reduce your work dramatically and are very accurate.  However, nothing is without its price.  It is often cost effective to have your payroll prepared by a computer service when you have 10 employees or more.

Reporting requirements are very detailed.  You should check with your accountant to determine which reporting requirements apply to you.  Some companies provide benefits to employees, which require special reporting.  Examples are meals and tips.  Additionally, if your business will rely on subcontractors or outside support services still different rules apply.  At a minimum, you will need to file the following forms. 

Financial Statement, Budgets, Etc.

You should prepare a budget of the income and expenses you expect your business to have. This is a useful tool; even it is only preliminary in nature.  Budgets are not meant to be cast in “concrete”.  As you work within your budget framework, you will find the need to modify various categories.  This is perfectly normal.  However, even as your budget is changed and re-arranged it is providing you with information you need to operate.

 Proper financial statements let you monitor your actual revenue and expenses.  These statements should be prepared by an Accountant.  It is absolutely essential that elements of revenue, expenses, assets and liabilities be recorded properly.  If financial statements are not prepared properly, you may be making financial decisions based on erroneous or inaccurate information.

The comparison of your actual results to your budget expectations provides you with a yardstick to measure how your business is doing.  If you scrutinize the information these tools are providing, you will be able to make adjustments in the way you spend money, advertise and procure business, and have a greater understanding of why you are making a particular decision.

Accounting Records

Accounting records come in various forms.  They range from nothing more than a check stub to very elaborate journal systems.  The ideal accounting system for the small business lies somewhere between these extremes: One of the most useful, and also simple, systems which have been devised for manual record-keeping is the “one-write” system. These systems are produced by various manufacturers and are readily available.  Their cost is not prohibitive and the resulting records provide the proper detail and are easy to work with.

The one-write disbursement system provides a journal page and a check with a carbon strip on the back.  As the check is written, the basic elements of the journal are produced.  These include the check number, a record of the person or organization being paid, and the amount of payment.  After the check is removed, the expenditure can be allocated to appropriate journal columns.  One-write disbursements can be expanded to include provisions for payroll, accounts payable, job cost tracking, computer input and various other alternatives.  Your Accountant can help you make the right decision of which one-write system, with or without modifications, is right for you.

Some businesses will require a one-write receipting system. This type of system allows you to produce a customer receipt while recording payment and producing a journal.  This system operates under exactly the same principle as the one-write disbursement system.  Provisions can also be added for accounts receivable record-keeping, job cost record-keeping, etc.  Once again, you should seek the help of your Accountant to select which system is appropriate for your needs.

State of New Jersey

  • Form NJ 500 – State Withholdings Tax
  • Form WR – 30 – State Wage Reporting Form
  • Form UC – 27B – State Unemployment Compensation
  • Form NJ w-3 – Reconciliation of Gross Tax Withheld
  • W2’s – Wage & Tax Statement

Federal

  • Form 941 – Employers Quarterly Federal Tax Return
  • Form 508 – Depository Cards – Federal Unemployment Taxes
  • Form 501 – Depository Cards – Federal Employment Taxes
  • Form 940 – Employers Annual Federal Unemployment Tax Return
  • Form W-3 – Transmittal of Income & Tax Statements
  • Form W-2 – Wage & Tax Statement
  • Form 1099 – Statement for Recipients of Income

There are many combinations of the above that must be filed within time spans which are not mentioned above. The above list is meant to provide you with a basic understanding and reference to the forms that must be filed.