You can do payroll yourself, but running it manually without software is asking for trouble. Especially in California.

Payroll is more than writing checks. Every pay period you need to calculate federal income tax withholding, Social Security, Medicare, California state income tax, and State Disability Insurance. Then you need to deposit those withholdings with the IRS and the EDD on schedule. Late deposits trigger penalties immediately, and they add up fast.

California has requirements that make payroll harder than most states. You’re required to provide itemized pay stubs with specific details. You need to follow California’s strict payday rules. You need to track paid sick leave accruals. Overtime kicks in after 8 hours in a single day, not just 40 hours in a week like the federal standard. If your crew works ten-hour days four days a week, you owe overtime for those extra two hours each day. Get that wrong and you’re looking at wage claims.

A payroll service like Gusto or ADP typically costs $40 to $80 per month plus $5 to $10 per employee per pay run. That covers tax calculations, automated filings, direct deposits, and year-end W-2s. For most trade businesses with a handful of employees, that’s $100 to $200 a month. Compare that to the hours you’d spend doing it by hand and the risk of a penalty notice from the EDD.

The middle ground that works for a lot of small contractors is using payroll software like QuickBooks Online Payroll. You’re still running it yourself, but the software handles the calculations, files the returns, and makes the tax deposits automatically. You get control without doing math on a spreadsheet. If you want to go this route, payroll system setup and training can make sure everything is configured right from the start so you’re not learning through expensive mistakes.

Where people run into problems is when they start with one or two guys and manage fine, then grow to five or six without changing their process. Quarterly filings get missed. Overtime gets calculated wrong. Workers’ comp audits don’t match what was reported. By the time they realize something is off, they’re dealing with notices and back payments.

The practical answer for most trade and service businesses is to use a payroll service or payroll software from day one. The cost is minor relative to the penalties for mistakes, and it gives you back hours every month. If you’re already behind on payroll filings or unsure whether things were done right, our bookkeeping and tax services for contractors can help sort it out and get you on a system that actually works going forward.

Do it yourself if you want, but don’t do it without software. And don’t let it slide as you grow. Payroll is the one area where cutting corners catches up with you fastest.