Larry Fine—of Three Stooges fame—once said, “The pain goes away on payday.” That quote certainly rings true for those of us on the depositing end of the transaction. But, if you’re the one responsible for signing the checks, I’m betting payday has caused its fair share of pain—and I’m not just talking about the blow to your bottom line. After all, as a business owner—especially in the business of health care—you’ve got a lot of proverbial t’s to cross and i’s to dot before you can even issue a check. Here are seven private practice payroll must-dos:

1. Get an EIN

That stands for Employer Identification Number (a.k.a. Employer Tax ID, Federal Tax Identification Number, or Form SS-4), and you’ll need one so your business can file taxes and other important documents with the IRS. You’ll also need it to submit employee information to state agencies. Basically, you can’t get away with not having one, so before you set up your employee payroll—actually, before you even hire any employees—make sure you apply for your EIN online or contact the IRS to obtain one. Additionally, some states require separate ID numbers for state tax purposes, so make sure you research—and abide by—your state’s requirements.

2. Do the Paperwork

Each new employee must fill out a federal W-4 and a state W-4 (in states that require this form) before receiving a paycheck. That way, you can withhold the appropriate dollar amount from each check. You also will need to file a signed I-9 form within three days of the employee’s start date (for work eligibility verification) and complete the appropriate new hire reporting as required by your state. For a more detailed list of tasks you’ll need to tackle before bringing your first hire on board, check out this blog post. And for an in-depth breakdown of all the new-employee forms you should have on file, take a look at this post.

3. Classify Correctly

For new businesses, classifying employees accurately from the get-go is crucial. And, as this Justworks article explains, employee misclassification is one of the most common—and most costly—mistakes that startup business owners make: “if the responsibilities of the job don’t materially change when a contractor ‘converts’ into an employee, the IRS considers that worker as having been an employee all along and can fine you for misclassifying them originally.” So, before you take advantage of the tax, benefits, insurance, and overtime savings that come with classifying an employee as an independent contractor, make sure the employee actually fits that description. (Hint: if the length of the work engagement is indefinite, then the worker is most likely an employee.) Furthermore, once you classify each employee, double-check the manner in which you are withholding income taxes, withholding and paying Social Security and Medicare taxes, and paying unemployment taxes for those employees (as noted here, these processes differ based on whether an employee is a contractor).

4. Set Your Pay Period

Most employers cut checks on a monthly or twice-monthly schedule, with some states requiring the latter. Once you determine how frequently you will pay your employees, you can adjust the amounts of any withholdings (e.g., taxes, health plan premiums, or retirement plan contributions).

5. Document Compensation Details, Policies, and Processes

For legal purposes, it’s crucial that you have an official record of not only each employee’s job duties and associated compensation details, but also your practice’s policies for paid time off (PTO) accrual and use; hours-tracking; and payment for overtime. Furthermore, you’re legally required to maintain certain records for periods extending beyond their years of active use. For example, as this US Small Business Administration (SBA) resource explains, “W-4 forms (on which employees indicate their tax withholding status) must be kept on file for all active employees and for three years after an employee is terminated.” The article goes on to caution that employers “also need to keep W-2s, copies of filed tax forms, and dates and amounts of all tax deposits.”

6. Pick a Payroll Service

In this day and age, payroll is not a do-it-yourself sort of endeavor. As this blog post notes, “Payroll is so hard to do, and business screw it up so often, that the IRS penalizes about 1 in 3 business for payroll mistakes.” So, unless you want to dedicate a substantial portion of your time to managing all of the aforementioned obligations, then you’ll probably want to invest in a payroll service. There are a variety of options—both in-house and outsourced—available to business owners in the US. But, you’ll want to make sure you find one that meets your specific needs as a healthcare business owner. Thus, just as the SBA suggests, I recommend starting your search by asking fellow therapy practice owners “which method they use and if they have any tips for setting up and administering payroll.” Just remember that whichever route you go, you’re still on the hook for ensuring proper reporting and payment of payroll taxes.

7. Stay on Top of Tax Reports

Speaking of taxes, businesses must submit certain payroll tax reports to various regulatory entities on either a quarterly or annual basis. Not clear on the specifics of your tax-reporting responsibilities? Then, as the SBA suggests, refer to the IRS’s Employer’s Tax Guide or contact your state tax agency.

For employees, payday is a joyous affair. But for business owners, payroll is no laughing matter—which is why it pays (get it?) to be hyper-vigilant about your practice’s payroll processes, systems, and compliance requirements. Got a payroll question or tip? Leave us your two cents in the comment section below.