Payroll 101: What Every Small Business Owner Needs to Know

Payroll isn’t just about cutting checks. It’s about staying compliant, protecting your business, and making sure your team is paid accurately and on time. Whether you’re hiring your first employee or already managing a small team, understanding payroll is critical to running a successful business.

Let’s break down the basics—and the most common mistakes to avoid.

What Is Payroll?

Payroll is the process of compensating your employees for their work. This includes calculating wages, withholding taxes, submitting payroll tax payments, and filing the appropriate tax forms with federal and state agencies.

Core Payroll Responsibilities:

• Calculating gross pay, overtime, and bonuses

• Withholding federal/state income taxes, Social Security, and Medicare

• Issuing paychecks or direct deposits

• Filing payroll tax forms (e.g., Form 941, W-2, 940)

• Making tax payments to the IRS and state agencies

• Complying with labor laws (wage laws, sick leave, minimum wage, etc.)

Employees vs. Independent Contractors

Before you even run payroll, you need to classify your workers correctly. Misclassifying an employee as an independent contractor can result in back taxes, penalties, and legal issues.

• Employees: Must be paid via payroll, with taxes withheld and reported. You must provide a W-2 at year-end.

• Independent Contractors (1099): You do not withhold taxes, and you must provide a 1099-NEC if you pay them $600 or more in a year.

👉 Not sure how to classify your workers? Read our guide on 1099 vs. W-2 or contact us for help.

Common Payroll Mistakes

Payroll mistakes are expensive and can trigger audits or penalties. Here are the top pitfalls we see:

❌ Missing payroll tax deadlines

❌ Misclassifying employees

❌ Failing to file quarterly payroll reports

❌ Incorrectly calculating overtime

❌ Not keeping up with state-specific wage laws

Why Outsourcing Payroll Is Smart

Unless you love dealing with tax forms and compliance deadlines, payroll is one task best left to the pros. Here’s why many small businesses outsource it:

• ✅ Saves time and stress

• ✅ Avoids costly penalties

• ✅ Ensures tax filings are accurate and on time

• ✅ Integrates with bookkeeping and accounting

• ✅ Offers direct deposit, employee portals, and tax form delivery

Tangerine Payroll Services: Affordable & Stress-Free

At Tangerine Business Services, we make payroll easy, affordable, and personal.

✔ Only $14.99/month per employee—no hidden fees

✔ We never outsource your data—your information stays secure

✔ Full-service payroll: direct deposit, W-2s, tax filings, compliance

✔ Optional HR support, employee handbooks, and onboarding help

✔ Seamless integration with your bookkeeping and QuickBooks

Whether you’re paying one employee or twenty, we handle everything so you can focus on growing your business—not fighting with forms.

Ready to Simplify Payroll?

Let’s make sure your team is paid right, every time. We’ll take care of the compliance, tax filings, and reporting—so you can focus on what matters most: your business.