The simplified payroll process: how to do hourly payroll for your team

Payroll is not really fun. But every business owner needs to do this if they want to keep their employees happy (and paid!)

The payroll process covers everything necessary to pay employees while complying with labor and tax laws, such as recording tax ID numbers, accurately tracking hours, calculating and deducting source, and pay stub sharing.

That's a lot, we get it. That's why we're going to help you find out what payroll really is, how to do it right, and what steps are needed to select the right software to set up your payroll process.

Give your team the tools they deserve.

Homebase helps you create a great place to work.

Find out more

What is payroll?

Basically, payroll is the process of paying your employees. It includes tasks such as determining taxes (including Social Security and Medicare) and tracking hours worked.

Converting timesheets to hours, processing tax returns and issuing 1099, W-2 and W-4 forms, providing benefits and distributing your employees' paychecks: it's all about payroll.

As a small business owner, you probably handle payroll yourself. In larger organizations, this may be delegated to a human resources professional or an accountant. Luckily, smart tools like Homebase offer everything you need to get the job done right without hiring extra staff.

How payroll works with small businesses

Payroll works differently for small businesses, mainly because their needs are different and they don't need all the bells and whistles a large business might have. These extras tend to come with steep learning curves (and price tags!)

The other key difference is that many small businesses choose to pay their employees on an hourly basis. And because hourly payroll is different from salary payroll, it requires different processes and tools.

Hourly payroll is based on an hourly rate and employees are paid based on the number of hours worked. Salaried employees, on the other hand, receive a fixed amount each month. Hourly payroll requires careful calculation of each employee's timesheets and overtime, so time clocks and employee scheduling software are often a necessity.

The different elements of payroll

Payroll management involves many processes and tasks, and it's not an easy task: you need to collect employee information, set up a payroll schedule, calculate and deduct tax deductions, etc. . other things that can quickly feel quite overwhelming.

Remember that you are not alone and you do not have to manage the payroll for your entire company yourself. Now, let's break down some of these payroll components a bit.

Pay schedules

For small businesses with hourly workers, a payroll schedule is a combination of a pay period, a period that employees worked, and a pay date (the day your employees receive their checks).

The most common payroll schedules in the United States are weekly, bi-weekly, semi-monthly, and monthly. Weekly schedules are best for small businesses because they simplify the calculation of overtime payments, which are usually irregular. This way, employees also get paid as soon as possible, giving them more control and flexibility over their finances.

Choosing the right schedule for your business is crucial, as it affects everything from payroll processing costs to employee morale to compliance with state and federal laws.

Social charges

The calculation and withholding tax are essential elements of payroll management. Taxes and tariffs...