How To Process Payroll and Payroll Taxes in Nigeria

To effectively process payroll in Nigeria is a key responsibility for your business if you have employees. And it is important to do it right. This is because you must make sure payment amounts are correct for employees, and payroll taxes are calculated, reported, and paid to the FIRS and states according to the law.

Unless you want to do your own payroll by hand, you have two options for doing payroll:

• Using payroll accounting software or an online service
• Using an accountant or payroll service provider

In either case, you'll need to know the basics of payroll processing so you can discuss options and deadlines and input the original information.

This article details the process of paying employees and collecting, reporting, and paying payroll taxes for your employees specifically.

What Does Processing Payroll Include?

Payroll processing, often called "doing payroll," includes:

• Deciding how much to pay employees, and how often, and in what way
• Getting withholding information from employees at hire
• Calculating paycheck amounts, including withholding payroll taxes and deductions
• Writing paychecks
• Reporting payments and payroll tax information to the IRS and states
• Paying those payroll taxes when they are due

Doing payroll also includes dealing with the FIRS for federal employment taxes and state taxing authorities.

Before You Begin Processing Payroll

As you hire employees, you as the employer have forms to complete. Each new employee must have new hire forms signed and placed in a specific file.

To help you set up payroll, here's a checklist of tasks that must be completed and decisions that must be made about how you will pay employees.

1 | Sign Up With Taxing Entities

You will need to sign up with the relevant authorities before you hire employees and begin payroll processing.

Processing Payroll

Payroll is processed at the end of each payroll period (as the case may be).

2 | Prepare Each Employee's Paycheck

Your second task is to prepare a paycheck for each employee. To do this, you must calculate the gross pay for the employee, based on whether this person is salaried or hourly. Gross pay is the pay the employee receives before any tax withholding or deductions.

• For hourly employees, it's the employee's pay rate times the hours worked.
• For salaried employees, it's usually the employee's annual pay divided by the number of pay periods in a year.

Subtract amounts for:

• Federal income tax and tax tables
• State income tax (if any)
• Other deductions for employee contributions for health plans, retirement plans, and other voluntary deductions

The result is the employee's net pay, which the amount of their paycheck.

Making Payroll Tax Payments

Depending on the size of your payroll, you must make periodic payroll tax payments to the IRS and to state taxing entities. For federal payroll taxes, you must make payments on a semi-weekly or monthly basis for the amounts you withheld from employee pay for federal and state income taxes.

You must make your payroll tax deposit payments using the approved payment gateways.

Payroll Tax Reporting

Businesses are also required to submit payroll tax reports on a regular basis. You must:

• Submit a quarterly report to the FIRS showing the amount of your payroll tax liability and the amounts you have paid on this liability during the previous quarter.
• Submit an annual unemployment tax report to the FIRS showing the amount of your unemployment tax liability and the amounts you have paid on this liability.
• Submit other state unemployment and worker's compensation reports.

Conclusion

Payment of Taxes should be seen as an obligation that we all have to our country, and instead of complaining about the situation of the country every time, we should rather check ourselves if in any way we have also deluded it of its right, as much as the nation owes us a lot, we also have a part to play.

We should try our best in the most possible way to contribute to the growth of the country. Payment of Taxes is essential, and when you are diligent, you have a right to demand for your rights.

Automating the processing of your payroll and payroll taxes would be the best option for your business. ExcellentBridge is committed to catering your automation needs.

We do hope this article helps you? Therefore, we would really love to help bring your expectations in business to life. To commence conversation with us immediately, kindly call +234803 458 9805, +234708 881 1463 or +234907 666 7747 or click www.excellentbridge.com