Payroll Made Simple: What Every Small Business Owner Should Know

Why Payroll Feels Complicated (and Why It Does Not Have To)

If you are a small business owner or freelancer, payroll may feel like one of those tasks that you cannot ignore but do not enjoy. Between tax withholdings, state rules, worker classification, and deadlines, it is easy to feel unsure if you are doing everything correctly.

The good news is that payroll becomes much easier once you know what it includes and use tools that fit your business size and goals.

What Is Payroll?

Payroll is the full process of paying employees or yourself (if you are incorporated) while ensuring all required taxes and filings are handled correctly.

To learn more, visit the SBA’s payroll overview:

https://www.sba.gov/business-guide/manage-your-business/hire-manage-employees

Why Payroll Matters for Small Businesses

Getting payroll right is about more than paying people on time.

California, Oregon, and Washington each have their own payroll and labor regulations. 

Find state rules here:

California Employment Development Department

https://edd.ca.gov/en/payroll_taxes/

Oregon Department of Revenue

https://www.oregon.gov/dor/programs/businesses/Pages/Withholding-and-Payroll-tax.aspx

Washington Department of Revenue

https://dor.wa.gov/taxes-rates/business-occupation-tax

Quick Tips to Keep Payroll Simple

For more details, see the IRS Employer’s Tax Guide:

https://www.irs.gov/publications/p15

Payroll and 1099 Workers: What You Should Know

Not everyone who works for you should be on payroll. The IRS has specific rules for determining whether someone is an employee or an independent contractor.

Important update: Beginning in 2026, the IRS will require Form 1099-NEC for contractor payments of $2000 or more.

Official guidelines:

https://www.irs.gov/forms-pubs/about-form-1099-nec

Employee vs Contractor Quick Guide

W-2 Employee vs 1099 Contractor

W-2 Employee	1099 Contractor
Employer withholds federal and state taxes	Contractor handles their own taxes
Employer pays Social Security and Medicare taxes	No employer payroll taxes required
May receive benefits depending on your structure	No benefits required
Must follow your tools, systems, and schedule	Controls how and when they work
Classified under IRS common law rules	You issue Form 1099-NEC at IRS threshold

If you are unsure how to classify someone, ask a CPA to help you avoid misclassification penalties.

QuickBooks Online Payroll Setup Checklist

What to Gather Before Setup

• Employer Identification Number
• State payroll account numbers for California, Oregon, or Washington
• Employee names and addresses
• Pay rates or salaries
• Pay schedules
• Direct deposit information
• Year-to-date payroll totals if switching mid-year

What Your Payroll Provider Helps You With

• Entering tax details correctly
• Setting up employee profiles
• Choosing pay schedules
• Connecting your bank account
• Reviewing state-specific payroll settings
• Verifying your state tax accounts
• Checking year-to-date totals

Common Setup Mistakes to Avoid

• Missing EIN or state payroll account numbers
• Incorrect worker classification
• Wrong pay schedule
• Not entering year-to-date totals
• Using the wrong QuickBooks Payroll tier
• Incorrect state tax configurations

Payroll Tax Deadline Calendar

Federal Payroll Deadlines

• Payroll tax deposits: Semiweekly or monthly
• Form 941: Due April 30, July 31, October 31, January 31
• Form 940: Due January 31

California Payroll Deadlines

• Quarterly DE 9 and DE 9C: Last day of April, July, October, January
• Payroll deposits: Based on your EDD schedule
• More information:https://edd.ca.gov/en/payroll_taxes/

Oregon Payroll Deadlines

• Quarterly Combined Payroll Report: Last day of April, July, October, January
• Withholding deposits: Monthly or quarterly
• More information:https://www.oregon.gov/dor/programs/businesses/Pages/Withholding-and-Payroll-tax.aspx

Washington Payroll Deadlines

• Business and Occupation tax returns: Monthly, quarterly, or annually
• Paid leave reporting may apply
• More information:https://dor.wa.gov/taxes-rates/business-occupation-tax

Payroll Made Simple for West Coast Small Businesses

Small businesses in Santa Clarita, Los Angeles, Portland, Eugene, Seattle, and surrounding communities often outsource payroll processing to save time, reduce stress, and prevent costly errors. Whitney Bookkeeping has an exclusive partnership with ADP to not only handle your payroll but also provide you with the lowest-cost options for small businesses.

With Whitney Bookkeeping, you receive a dedicated payroll partner:

You focus on running your business. We handle payroll with clarity and care.

FAQs About Payroll for Small Business Owners

1. Do I need to put myself on payroll?

This depends on your business structure. Corporation owners usually must take payroll. Sole proprietors typically take owner draws. A CPA can help you determine what applies to you.

2. How often should I run payroll?

Most businesses choose biweekly or semimonthly. Choose a schedule that supports your cash flow.

3. Can I do payroll myself?

Yes, but it can be time-consuming and stressful. Many small businesses use payroll software or outsource to avoid errors and penalties.

4. What is the difference between a W-2 and a 1099 worker?

Employees have taxes withheld. Contractors do not. Misclassification can lead to IRS and state penalties.

5. What if payroll taxes are filed late?

You may face penalties and interest. Staying timely is essential.

6. Can Whitney Bookkeeping help with Payroll?

Yes. Whitney Bookkeeping can help you establish a partnership with an ADP representative to handle your payroll needs, stay compliant, and keep costs low.

The Bottom Line

Payroll does not have to feel overwhelming. With the right support, you can pay your team accurately, stay compliant, and avoid costly mistakes.

Whitney Bookkeeping helps small businesses across California, Oregon, and Washington streamline payroll and gain peace of mind.

Schedule your free consultation today to simplify your payroll and see if you qualify for 30% off your new QuickBooks Online account.

Helpful Resources