A: Be sure you are counting ALL the costs; including risk and liability!
How much time do you spend on payroll and administrative duties? How do you handle employee complaints? How do you keep up with changing regulations, withholding rates and government forms? More importantly, would you pass an audit if the IRS or Department of Labor walked through your door?
- Back office responsibilities for small businesses are a real money burner. The more time you spend on payroll and HR related tasks, or on hiring and training a bookkeeper, the less time you’re spending managing your business. Most small business owners didn’t go into business because they were passionate about performing the administrative tasks that go along with running a business.
- According to the Small Business Administration: small business owners spend between 7% and 25% of their time handling employee-related paperwork and issues. Is this the most productive use of your time?
- One government intervention or employee complaint can tear down a business.
- Now is the time to strategize and give your company a competitive edge. Keeping up with the ever-changing tax laws and HR regulations is crucial in reducing your business risk and liability.
With EmployShare, you can grow your business while we fortify your compliance requirements.
A: How about retirement plan compliance? How about maximizing tax advantages for yourself?
We hear this all the time: “I am such a small organization with only one employee. I don’t need all of your services!” Unless this employee is a relative, you may have more risk than a business with 20 employees.
- Think about this. Your one employee knows everything about your company. He or she handles all of your payroll, benefits, client questions, and back office responsibilities. What happens when this employee leaves?
- More importantly, what happens if this employee leaves and goes to work for your competitor? All of his/her knowledge and expertise learned from you is now working against you.
- How will you handle all of the administrative duties like payroll and taxes? This is a pretty scary and realistic situation. Having one employee handle all of your business leaves you very vulnerable. Naturally, there should be a level of employer/employee trust, but these “what if’s” are real and you should think big when protecting your small business.
- Back office responsibilities for small businesses are a money burner. The more time you spend on payroll and HR-related tasks, or on hiring and training a bookkeeper, the less time you’re spending managing your business.
- Most small business owners didn’t go into business because they were passionate about performing the administrative tasks that go along with running a business.
EmployShare’s number one priority is protecting what you have worked so hard to build. We understand how important every employee is to the success of your business and we want to eliminate work that is non-revenue producing. We can be your one point of contact for all administrative operations.
A: Employee-related litigation has skyrocketed. In local, state and Federal Courts, employee class action suits have increased more than 72% since 2007.
- You don’t want to make your business more vulnerable to a lawsuit than need be. The most important thing to remember is to be proactive, not reactive, to a situation. It is critical to comply with all applicable federal and state laws, implement handbooks and employment agreements, and have policies and procedures in place.
- Whether your practice is large or small, no business is immune from employment-related lawsuits; you face significant liability when making personnel decisions. Even if a lawsuit has no grounds, the costs associated with defending these suits can be overwhelming…both in time and money. Employer Practices Liability Insurance helps to provide protection for an employer against claims made by employees, former employees or potential employees.
- Another option to protect you is to legally form a corporate entity to manage your practice. Choosing the right business entity can provide a significant reduction in liability and risk as well as tax savings, improving your bottom line. Many of the personal liabilities you have, such as the liability for employees, become a corporate liability. You have created an extra layer or veil between you and these liabilities.
- EmployShare will work with you to form the right entity for your business. Protecting your assets is vital and EmployShare will show you how.
A: According to the IRS, if you manage the business or work in it you MUST pay yourself W-2 wages.
- S-Corps and LLC’s with S-Corp elections often offer great tax advantages and reduced liability to the owner, so make sure you are getting the most bang for your buck.
- One of the quickest ways to ensure you are audited as an S-Corporation is to file a corporate tax return that does not reflect “Compensation of Officers.”
- It is assumed by the IRS that no one works for free, and the IRS has said that officers of an S-Corporation must receive wages.
- As an owner-employee of the S-Corporation, you must pay yourself a “reasonable amount” salary, and pay payroll taxes on your salary, according to the IRS.
S-Corp advantages of being on payroll through EmployShare:
- You bear no administrative cost of participating in the cafeteria plan through EmployShare.
- You are able to adopt EmployShare’s retirement plan (low administrative costs).
- Your officers can participate in our multiple-employer cafeteria plan and flexible spending arrangements.
- You pay no self employment tax.
- EmployShare is responsible for all tax payments (no more filings needed).
- The S-Corporation is often more appealing to the small business owner because it provides attractive tax advantages and still provides the owner with limited liability protection. With S-Corp taxation status, there is just one level of federal tax to pay and you eliminate being “double taxed.”
- Learn more about the tax advantages and liability reduction gained from an S-Corp or LLC with S-Corp election though EmployShare.
A: You just may be; the IRS thinks 90% of contractors are misclassified!
- You may believe that hiring an employee and classifying them as an independent contractor (paying them using a 1099) is best and saves you money. Be Careful! The regulations on 1099 contractors vs. W2 employees is a hot topic in court cases today and with one wrong classification you could find yourself in hot water with the IRS, State Departments of Revenue, State Departments of Labor and Workers Compensation Bureaus.
- IRS agents are very motivated to make sure business owners hiring contractors comply with the requirements established in Internal Revenue procedures and publications.
- There is a fine line between employee and contractor classification and, in most cases, W2 employment is the best choice for your staffing needs.
- If the IRS finds you non-compliant, you are looking at fines, penalties and back taxes that can put you out of business.
- Take a look at the ramifications for misclassification:
Liability for failing to deduct and pay taxes – Section 3509
- 1.5% of wages paid to the employee or independent contractor
- 20% of the employee’s share of FICA
- 100% of the employer’s share of FICA
- 100% of the FUTA
- The first two fines are doubled for failure to file Form 1099
- $50 minimum fine for failure to file W2 or 1099 form
- 25% of the unpaid tax liability for failure to file quarterly returns
- .5% of the unpaid tax liability for each month up to 25% for failure to pay taxes
- Section 3509 does not apply when the Employer intentionally disregarded reporting rules. This is referred to as a full rate adjustment. The IRS will attempt to collect 20% of the wages and withholding and 100% of the FICA due – both the employer’s and employee’s share.
Liability under Section 3402(d)
- If the employee fails to pay taxes, the employer is not relieved of its liability for any penalties or additions.
Liability under Section 6672 Personal amounts owed.
- The IRS may collect any amounts due from any person who effectively controls the finances of the business entity. Under this section a 100% penalty may be imposed where the employer had no reasonable basis for believing that withholding was not required.
Liability under Section 7202
- Willful failure to collect or truthfully account for, or pay, taxes is a felony and subject to a fine up to $10,000 and/or 5 years in prison.
State Tax Liabilities and Penalties
- Penalties vary from state to state.
- If due to fraudulent intent to evade tax, 100% of the unpaid tax plus fines and penalties.
Workers’ Compensation Liabilities
- Workers’ compensation penalties vary from state to state.
- Many states charge $1,000 to $1,500 per day for every day you do not have workers’ compensation insurance for an employee.
- Misclassified employees example: 1099 should be W2 and the employee was on your staff for one year – the penalty will range from $365,000 to $547,500. There is no safe harbor.
State Unemployment Taxes (SUTA)
- You will be liable for unpaid tax, fines and penalties as specified by the state.
Stay compliant with EmployShare. Let us limit your risk and liability by correctly classifying your employees.
A: Be sure you understand your obligations before day one.
- Payroll, liability, and risk. The moment you become an employer, you are responsible for payroll taxes, benefits, retirement plans, hiring, firing – the list goes on.
- Employees are your biggest asset, but also your biggest liability.
- Your administrative burden of having employees will grow right along with the growth of your business. You will have to deal with the hundreds of statutes, regulations and requirements placed on every employer by federal, state and local government.
- Benefits compliance
- Wage & hour
- Employee classifications (exempt vs. non-exempt)
- Employee classifications (common law vs. independent contractor)
- Pension Plan compliance
- Payroll and payroll tax compliance
- Payroll records and files
- Tax entity
- Human Resource compliance
- Performance management
- Claims and risk management
EmployShare can make your transition to an employer seamless, as we guide you every step of the way. We are your human resource administrator with turnkey solutions.
- Create employee files and electronically store all employee records in accordance with federal and state regulations
- Issue payroll checks, W2’s, and 1099’s
- Offer direct deposit to multiple employee accounts
- Provide collection, payment and filing of ALL taxes including federal, state, local, SUTA, FUTA, workers’ comp, and state disability where mandated
- Create Payroll Cost reporting so you can see the true cost of each employee
- Oversee any payroll audits on your behalf, including IRS audits, other federal and state agency audits, workers’ comp audits, and any other audits where payroll or employee record information is required.
- Offer selection of medical plans: fully insured and self insured, as determined by advisor
- Customize Cafeteria plans to any need
- Administer employee benefits including Health, Life, Dental, Disability, Supplemental Accident and Vision
- Collect, pay, and file all insurance deductions/premiums, including medical and retirement
- Create annual employee benefits statements
- Ensure benefits compliance with pension plan, COBRA, and HIPAA
- Leverage best practices for recruitment strategies
- Review and analyze resumés to develop a qualified pool of candidates for first interview
- Rank and review applicants based on first interview evaluations. Provide list for final interview and a final interview strategy
- Implement leadership training, management consulting and employee training programs
- Complete and evaluate performance reviews and employee opinion surveys
- Create employee handbooks including your specific policies, with state-neutral or state-sensitive language
- Develop employer/employee agreements, contracts and other Policy and Procedure Manuals
- Ensure proper employee classification regarding W2 vs. 1099 and exempt vs. non-exempt
- Conduct background checks including credit, criminal and previous employer, and pre-employment screening and testing; drug testing
- Account for vacation, sick and personal time
- Assist with terminations and lay-offs, separation agreements and severance packages
- Maintain worksite health and safety through safety guidelines, pre-employment and random drug testing, and safety committee training
- Provide Business Owners Insurance Packages, including General liability, Property Risk liability, Workers Compensation and Employer Practices Liability
- Manage Insurance and Unemployment claims
- Ensure Wage and Hour compliance
- Provide proactive audit compliance
- Provide guidance for optimal use of your legal entity
- Leverage best practices for optimizing your employees’ productivity
- Create agreements for owners, partners, employees and more
- Control and stabilize costs to increase profits