How to Do Payroll for a Small Business
Running payroll for the first time feels intimidating, but it comes down to a repeatable checklist. Here's the overview.
Before Your First Payroll
Get an EIN, register for state payroll taxes, classify each worker correctly (employee vs contractor, exempt vs non-exempt), collect W-4s, and pick a pay schedule (weekly, bi-weekly, semi-monthly, or monthly).
Each Pay Run
Collect accurate hours, calculate gross pay (including overtime), withhold federal/state/FICA taxes and any deductions to get net pay, pay employees, then remit the withheld taxes and file the required reports.
Accurate time records are the foundation — a time clock that totals hours and overtime automatically removes the most error-prone step.
Stay Compliant
Keep payroll records (most for 3 years, time cards for 2) and provide pay stubs where your state requires them. Many small businesses use a payroll provider (Gusto, QuickBooks, ADP) for tax filing and pair it with a time clock that exports clean hours.
FAQ
Can I do payroll myself?
Yes, but most small businesses use a payroll provider for tax filing and a time clock to capture hours, to reduce errors and penalties.
How often should I run payroll?
Bi-weekly is the most common US schedule; choose what fits cash flow and your state's pay-frequency rules.
Track hours the easy way — free
Kloqk is a free time clock that handles hours, overtime, and payroll-ready exports.
Start free