How Do You Do Payroll for an Employee?

To do payroll for employees, figure out the employee's gross pay; calculate and deduct income taxes; deduct FICA, payments, and other non-taxable deductions; pay employees with checks or direct deposits; submit paperwork for federal and state taxes; and pay the taxes online, says This process can be done manually, by an accountant or using a software program.

When calculating gross pay, use a precise record of all of the hours employees worked, including overtime hours, which are commonly require higher hourly rates by law, explains Other elements that affect gross pay include vacation or sick-day pay, and there should be a company-wide policy on how to handle and pay these. Along with mandatory taxes withheld from an employee's gross pay, an employer needs to be exact about other deductions such as those for retirement accounts or health insurance.

After paying the employees, file the proper documents with tax authorities to submit the employees' withheld taxes, the employer's FICA payment, and records that serve as base for other payments such as unemployment benefits. Employers need to file quarterly tax returns based on payroll, annual returns of federally withheld income tax, and wage and tax paperwork such as W-2 forms.