Unfortunately, there is no escaping payroll tax. It's something that you will need to deal with from the day that you get your first job until the day you retire.
If you own a business and hire employees, you'll need to make sure you're taken the proper amount out. Let's dive in to what it's all about, how to figure it out, and what it means to you.
Payroll tax is the amount of money that comes out of your paycheck each and every pay day for the various services that you need to pay for. And, there is even a specific tax that is for the use of payroll as well. Hey, you know what they say, nothing is certain except death and taxes.
If you're a business owner, then you realize that you will need to take care of these payroll tax needs for your employees. The problem is that you cannot possibly take care of that information for your employees on your own.
You need various types of help in collecting it, figuring it out, and keeping track of it. While this is quite difficult in most cases, the good news is that there are some excellent payroll tax software programs and bookkeepers (raising hand) who can help you and cut down on the various needs that you have.
Payroll tax software is a great way to make sure that you are getting the right information as well. There is nothing worse than making the wrong payments or not following through on something that you are responsible for, for other people. Payroll tax software can help you do what you need to do effectively and do it right the first time and a professional bookkeeper can get the software set up correctly from the beginning or adjusted if it's not correct.
Whether you are updating your payroll tax or if you are looking for a new option to consider for your new business, having the right payroll system in place is important.
You'll find a wide variety of options available to you on the internet, or contact us for a free consultation on what we recommend and how we can help you with payroll taxes.
Take some time to talk search the options available so that you'll find just what you need. You will find both basic and very complex programs, but it's critical to get one that's set up and designed just for your business and it's needs. And, you'll find these all available in budget-friendly options as well. Payroll tax is something we can't avoid but it doesn't have to be that difficult either!
Want to learn more about the reasons for payroll taxes and what that money is allocated to? Read this article.
If you are running a home business, it is important to remember that there are tax deductions for you when tax season rolls around. Of course, you do not want to try to fool the IRS (no one wants to run the risk of being audited!), but you do want to take advantage of those deductions that are rightfully yours. Running your own home business takes much of the same expenses, effort, time, space, equipment, and travel as any other business. Below are some home business tax deductions to remember before tax season is upon you.
If you have a home office that is dedicated solely to your home business, you can add it to your list of home business deductions. The same goes for phone charges, office supplies, furniture, software, subscriptions, and other equipment. Don't fear an audit for making these home business tax deductions as long as these items are used exclusively for your home business.
If your business requires you to leave your home office, you can add the cost of travel, mileage, meals, entertainment, and anything else that goes along with the cost of living on the road to your home business tax deductions. During the year, make sure you keep documentation of your mileage, your trips, food, etc.
Now, what about the really big stuff? Well, when making home business tax deductions, you can also take into consideration insurance premiums (if you are self-employed and pay for your own insurance), the money you deduct for retirement, and half of what you pay towards your social security. And if your children are seventeen or younger and are working for you, you can deduct their salaries as business expenses.
This is just a quick scan of the home business tax deductions you can take advantage of. For more information, check out www.bankrate.com, or contact us to handle your bookkeeping and we'll keep you in the loop on what's deductible in your situation.
Starting a business can be quite trying at times. There are many things you must consider when starting a business. In addition to deciding what type of business you will start up, what the business will sell or what services the business will provide, you must also make sure that your business is in compliance with all local, state, and federal business laws.
In addition to a business license, required by almost all localities in the United States, a new business must file many tax forms at the start of the business.
If you are selling a product, your business will need to file for retail sales tax licenses. Depending on the location of your business, you may need to file for a retail sales tax license from your city, county, and/or state. If you are selling a service, and your state or city requires sales tax for services, your business will also need these forms.
Another thing your business will need to file for is a federal tax identification number. This number is used on all tax documents for your business. It may not be required if you will be the only person working for your business. However, if you plan to use subcontractors or employees, you will need a federal tax identification number in order to pay your contractors or employees. This is required by the federal government so that wages paid can be tracked by the IRS for purposes of collecting income taxes.
Some cities require that individuals and businesses pay a local income tax in addition to state and federal income taxes. You should find out if your business will need to pay this type of tax, and what the filing requirements are for your location.
Many businesses are required by law to file quarterly federal income taxes. If you are a smaller or home based business, these quarterly tax payments are not necessary by law, but can prevent you from owing taxes at the end of the year.
If you are not sure whether or not your business should make quarterly tax payments, you should contact a professional accountant to answer these and any other questions. If your business does need to make quarterly tax payments, you will want to obtain the necessary forms for your business taxes from the IRS prior to starting your business. Become familiar with the forms and the processes, and organize yourself so that your business runs smoothly after start up.
There are many other considerations when starting a business. You need to make sure that your business follows all business laws applicable to your type of business. Some industries and businesses require additional licensing. Other industries require additional insurance to be purchased. Workman's Compensation insurance is required by federal and most state laws if you have any employees. Some states require a business to carry liability insurance to cut down on law suits, while in other states this type of business insurance is optional.
Make sure you know the legal requirements for starting a business before you actual begin doing business. This way, you will be compliant with all local, state, and federal business laws, thereby cutting down on your risk of running a business as well as cutting out the possibility that your business could be shut down before it has ever truly begun.
Want to make a smooth transition when starting your new business? Let a professional bookkeeping team set up your books properly from the beginning. Give us a call and let us know how we can help you.
When you enter into a working relationship with others, it’s very important to have a contract. Each contract will vary greatly depending on the type of services you provide, but in general, every contract needs these basic components.
Detailed Description of the Services You Will Provide
It’s essential to very clearly describe the services that will be provided. The more detail you can put in this part of the contract, the fewer misunderstandings will occur. This is very important, especially if you are charging on a per-project basis instead of only hourly. You don’t want scope creep to ruin any profit-making potential.
Complete Description of the Relationship between Both Parties
This is the area where you mention the nature of the business relationship, in terms of whether or not you are an independent contractor or an employee. Spelling it out here will protect both parties from IRS issues later. However, keep in mind that acting like an employee/employer, no matter what this section states, is what the IRS really cares about.
Responsibilities of the Service Provider
Spell out in great detail which dates you’ll have the work completed by, and what your responsibilities are to the client in regard to getting the work done. How will it be submitted to the client? What constitutes finished work? Be very specific in this area. It will help protect you as well as help you feel done each day when you know what constitutes "finished."
Responsibilities of the Client
Spell out what the client must do so that you can do your job. For example, state that the client must get you the information you need by a certain date each month, and say how the client should contact you when they have questions. Be very specific and exact in this section so there is no mistake about what the client needs to do to ensure that you can do your work in a timely manner.
Important Due Dates
Restate the important due dates for both sides of the client/service provider equation. The reason you want to state this again is that it’s an essential component in being able to work together cohesively without issues. These dates will ensure that it all happens without a lot of back and forth or problems.
How Payment Will Be Processed
State how and when you will bill the client and how and when you expect the client to pay you. If you want to be paid via Paypal then you should say so, otherwise, they may not be prepared to pay you this way - which can cause delays. Spell out all the terms, the amount and how and when it all happens.
Terms for Termination
Tell the client how they can terminate your agreement, and state how you can terminate the agreement. If there is an end date to this contract, state that here too. If there is going to be a rate increase at any point (if it’s an endless contract), state it here as well. This way the client is aware of what will happen in the future, giving them the opportunity to leave the contract if they want to.
This is something that is good for both parties - you agree not to tell people you work for the client and the client agrees not to state what they pay you to people they recommend to work with you. Whatever you both want in this agreement to protect both parties in terms of non-disclosure goes here.
Ownership of the Deliverables
State in this section who owns the deliverables. Usually, you will put words to the effect that deliverables are owned by the client once payment has been processed. This will help prevent non-payment or claims of ownership of the work when payment has not yet been submitted. This is the best way to protect your hard work and their intellectual property.
It’s super important to include any legalities that are required by your state or country. It also is good for the service provider to include a line that states any court proceedings and all laws will be determined by your state, city, and county. That way if a problem happens you won’t have to travel to court.
Finally, always ensure that both of your names, business names, addresses, phone numbers, and emails and if applicable tax ID numbers such as your EIN (this is an employer ID number, although you do not need employees to have one). This is preferable to use than your social security number.
When it comes to running a business successfully, you certainly need quality bookkeeping.
It will help you avoid any kind of miscalculations that might lead your company to a lot of undue stress. Leaving this important issue to your existing employees would be a bit unwise. Not only that they already have their own administrative and sales tasks, it is more likely that they input the data incorrectly. This simple mistake might also cost you a lot of money. Now that you know the significance and importance of bookkeeping to your business and company, it is without a doubt that you hire reliable bookkeeping services.
If you like to save your money on this expense, it would be best if you can choose a virtual bookkeeping service. The Bean Counters Bookkeeping is provides virtual bookkeeping services to many customers with small businesses. Thanks to the quality bookkeeping services, you can now have more focus on how to run your business.
Bookkeeping can be a very time-consuming task for any company. It has to be conducted properly and it is important that you can avoid any kind of miscalculations. Taking this task on your own might be an option, but one thing is for sure, you'll not have enough time to focus on growing your business.
It's almost impossible to come up with plenty of time for your family, friends, and hobbies. It's best to leave this important task in the hands of professional virtual bookkeeping service providers. Not only will it allow you to pay more attention to growing your business, virtual bookkeeping services will also save your time.
We are located on the coast of North Carolina, but more than happy to serve the clients outside of our area. In fact, our clients are located across the US. All our services are designed to save your money as well as your time. The Bean Counters Bookkeeping has what it takes to provide you with relevant financial data which you can use to make critical business decisions.
The Bean Counters Bookkeeping can be your business partner as well. And as a reliable partner, we will help you grow a more productive and successful business. That way, you'll have more time to manage the financial details of your business. We'll remove the need to hire an additional employee to take care of your bookkeeping issues. More importantly, we will provide you with all the updates you'll need including budgeting and forecasting, accounts payable and receivable, day-to-day bookkeeping services, payroll, QuickBooks set up, QuickBooks training and interpreting financials. The Bean Counters Bookkeeping is also capable of providing additional services like invoice creation, cash flow analysis and job costing.
Employee taxes can be one of the most difficult to understand areas of running a business and hiring employees. If you don’t understand all the complexities involving employee payroll tax, it can also get you into a heap of trouble.
The first employee tax factor you should understand is what taxes you are responsible for as an employer. There are three employee taxes that you will be responsible for paying.
The first is Medicare and Social Security tax. This is often referred to as FICA and provides welfare benefits funding for senior citizens. As an employer, you are responsible for paying half of the FICA taxes and withholdings for your employee while the remaining half is withheld from their paycheck.
You are also responsible for paying federal unemployment tax (FUTA). This tax funds the state unemployment benefits and the administrative costs associated with those benefits. It is important for you to know that you must pay 6.2% federal unemployment tax on the first $7000 earned by each person you employ during the calendar year.
In addition to federal unemployment tax, you must also pay state unemployment tax. These taxes are based on the location and size of your business as well as the number of employees you employ. Since each state operates its own unemployment program, these rates do tend to vary; so, it’s best if you check with your own state’s unemployment division for specific details.
In addition to the taxes you must pay as an employer, you are also responsible for withholding employee tax. Even though this is the employee’s contribution, it is your responsibility to handle the employee tax withholding. You will need to pay close attention to the employee tax form, or W-4, completed by the employee to know exactly how much money you need to deduct from the employee’s paycheck. Usually the amount of money you must withhold will depend on the number of withholding allowances claimed by the employee, their marital status and any exemption from withholding taxes that the employee might claim.
It is very important that you stay on top of your employee’s tax forms because they have the right to change them by submitting a new W-4. If an employee submits a new employee tax form, thereby changing the amount of their withholding and you fail to deduct the correct amount of money, you could be subject to penalties by the IRS.
You will need to deposit both the taxes that you are responsible for paying along with the employee tax withholdings in an authorized depository for Federal taxes. These taxes will be due either semi-weekly or monthly. Your employee tax withholding due dates will be determined by the size of your payroll, dictated by the schedule. Usually, however; if your payroll is less than $2,500 every three months, you can file quarterly. If your employee taxes are larger, you’ll need to file more often.
As most employers know, employee taxes can be a real headache. Unfortunately, the employee payroll tax problem is a headache that simply must be endured. With a little understanding and careful attention to detail; however, the hassle of filing employee tax withholdings can be a little less of a bother.
While death and taxes are the only thing certain in life, you can make the latter a little less painful by using a virtual bookkeeping team who is on top of all the intricacies of taxes, deadlines, and law changes. The Bean Counters Bookkeeping team can make sure you’re compliant, on time, and help you get a better picture of your business’s financial picture.
Reach out today and let’s chat.
What does an audit do?
If a business breaks the rules of accounting and ethics, it can be liable for legal sanctions against it. It can deliberately deceive its investors and lenders with false or misleading numbers in its financial report. That's where audits come in. Audits are one means of keeping misleading financial reporting to a minimum. CPA auditors are like highway patrol officers who enforce traffic laws and issue tickets to keep speeding to a minimum. An audit exam can uncover problems that the business was not aware of.
After completing an audit examination, the CPA prepares a short report stating that the business has prepared its financial statements, according to generally accepted accounting principles (GAAP), or where it has not. All businesses that are publicly traded are required to have annual audits by independent CPAs. Those companies whose stocks are listed on the New York Stock Exchange or Nasdaq must be audited by outside CPA firms. For a publicly traded company, the expense of conducting an annual audit is the cost of doing business; it's the price a company pays for going into public markets for its capital and for having its shares traded in the public venue.
Although federal law doesn't require audits for private businesses, banks and other lenders to private businesses may insist on audited financial statements. If the lenders don't require audited statements, a business's owners have to decide whether an audit is a good investment. Instead of an audit, which they can't really afford, many smaller businesses have an outside CPA come in on a regular basis to look over their accounting methods and give advice on their financial reporting. But unless a CPA has done an audit, he or she has to be very careful not to express an opinion of the external financial statements. Without a careful examination of the evidence supporting the amounts reported in the financial statements, the CPA is in no position to give an opinion on the financial statements prepared from the accounts of the business.
What's in an Audit Report?
Most audit reports on financial statements give the business a clean bill of health, or a clean opinion. At the other end of the spectrum, the auditor may state that the financial statements are misleading and should not be relied upon. This negative audit report is called an adverse opinion. That's the big stick that auditors carry. They have the power to give a company's financial statements an adverse opinion and no business wants that. The threat of an adverse opinion almost always motivates a business to give way to the auditor and change its accounting or disclosure in order to avoid getting the kiss of death of an adverse opinion. An adverse audit opinion says that the financial statements of the business are misleading. The SEC does not tolerate adverse opinions by auditors of public businesses; it would suspend trading in a company's stock share if the company received an adverse opinion from its CPA auditor.
One modification to an auditor's report is very serious - when the CPA firm says that it has substantial doubts about the capability of the business to continue as a going concern. A going concern is a business that has sufficient financial wherewithal and momentum to continue it normal operations into the foreseeable future and would be able to absorb a bad turn of events without having to default on its liabilities. A going concern does not face an imminent financial crisis or any pressing financial emergency. A business could be under some financial distress but overall still be judged a going concern. Unless there is evidence to the contrary, the CPA auditor assumes that the business is a going concern. If an auditor has serious concerns about whether the business is a going concern, these doubts are spelled out in the auditor's report.
Are you dreading clearing the accounting and bookkeeping work that's piled up in your desk or in your inbox? Decide to outsourcing accounting and bookkeeping to deal with the issue with ease and precision.
This is the simplest way for small business owners to deal with the heavy workload of making sure their finances are in order. However, don't outsource until you have proper knowledge about all the aspects and details of outsourcing.
Imagine you're going to give out your entire business process to be handled by another organization. I'm sure you'll want to know all you can about this particular aspect. You don't want to be caught unaware; if something goes wrong with the entire process. Research and more research is the answer.
Choose the right company to do your bookkeeping work. Numerous virtual bookkeeping firms come up with attractive and lucrative offers to do the work for small businesses like yours. Find out as many things as you can about the company before you actually let them do your work.
The internet is a storehouse of information and utilizing it in the best possible manner is your responsibility. Check out the services provided by various companies. Also, read the testimonials from firms who have already done accounting and bookkeeping for other small businesses. Do they have glowing reviews? Are the reviews in line with what you'd expect?
Next, check out the various security measures put in place by the bookkeeping company to protect your company and customer data. This is an important aspect of with which you must take special care. In this day and age, people have become increasingly skeptical about giving out information about their financial details online. For good reason. Security measures must be stringent enough to deal with this issue and to also bring back the faith of customers to the entire process of outsourcing.
Then, make sure the bookkeeping firm will be able to meet important deadlines with plenty of time to spare. Highly qualified professionals know which forms and payments are due to the IRS and local governments and when they're due. They strive to provide the best possible service that you can afford within your budget. They essentially become part of your team, so choose wisely.
Monetary wise, outsourcing your bookkeeping works well for most small businesses. You don't need to undertake any additional financial investment such as overhead for an employee. In fact, excellent virtual bookkeeping firms will work to find more money for your company. Imagine you don't spend an extra cent and yet end up earning profits!
Check to see if the bookkeeping firm offers free consultations. You can take this opportunity to ask questions about the quality of the work, how your finances will be handled, and any communication expectations. Based on this, you can decide whether you actually want to move forward or find another bookkeeping team better suited to your business.
Outsourcing is beneficial to your business in many ways, but all of these benefits are subject to your working with the right bookkeeping company. Why not try outsourcing your bookkeeping and accounting and experience a faster and more efficient way of doing business today!
Once you’ve decided to create a membership, one of the things you’ll need to determine is the price. How you price your membership is very important. You can turn away or bring in the right market based on the price. Price in and of itself doesn’t always indicate value, though; that’s for the members to determine. What you need to do is figure out what you want to charge based on the type of value and the number of members you want to attract.
Limited Memberships Mean Higher Fees
If you have a limited membership where you only let a certain number of people in the group at any given time, then your fee structure will be based on that. Figure out the time and effort the membership will take from you, how much you want to earn each month, and then use that information to determine the monthly fee.
For example, let’s say you’ve created a membership that you’re only going to allow ten people to join. In this membership you allow open office hours, a one-hour personal call each week, unlimited email interaction, a weekly webinar, and a monthly webinar on a topic of interest to the group. Plus, you have a private Facebook group for members current and past only.
You can go by the time it takes you to conduct all this work, or you can instead just determine how much you need and want to make. Let’s say you’ve decided you want to earn $100K a year with the membership. With only ten paying members allowed at any given time, you’ll need to charge about 833 dollars a month to each paying member to earn $100K a year.
Here’s the math:
Desired earnings 100K a year / 10 Members = 10,000K /12 Months = $833 per month, per member.
Unlimited Members Means Lower Fees
With unlimited members allowed, you won’t have time for the one-on-one work, so it’ll be hands off other than interaction in a private forum. So, let’s say your membership offers a learning center, with a new course added each month that relates to the niche, plus a group coaching forum. Through the membership you’ll offer other opportunities, but they’ll all be group format and no one-on-one activity. For example, you may offer a webinar monthly on a topic, as well as early intro to new products and services.
In this case, you need to find out how many potential customers you can attract to meet your goal of $100K a year. If the market has one million people in it, how many of those can you convert to paying subscribers? At $27.97 a month you’ll need about 298 members to meet the $100K a year goal.
You’ll need to study whether it’s a possibility or not. If not, you may have to raise or lower the price to ensure that you attract the right amount of regular members to the membership.
Here are some examples of how it might break down.
Goal $100K a year:
You’ll need to also keep in mind the payout to affiliates, marketing, advertising and so forth, but this gives you a general idea of what to consider when pricing your membership for best results. It always starts with your goal, big or small group, and your audience. How many of them are there, and how many can you attract and keep happy?
The Bean Counters Bookkeeping team is ready to help you track your numbers and keep your books in order. Need some help? Schedule a free consultation today.
Someone once said that, “While money doesn’t buy happiness, it sure does make me giggle a lot.”
Obviously, this was said by someone who not only was given money, but also had time to spend it.
Because, the truth is, money alone doesn’t create joy; being able to have time to spend it and do things with those you love is what happiness and success truly is.
When people want to become entrepreneurs they don’t actually think about the work; they think about the freedom.
What Is Success?
This boils down to what success really is. Success is freedom. Success means that you can take the day off to spend with your kids on a field trip. Success means that if you want to enjoy a leisurely breakfast with your spouse on Sunday morning, you can. Success means that if you want to take that trip to Nepal, you can.
Yes, money does help you afford those things, but money is only the means by which you can purchase them and anyone can make money. But, not everyone who has money also has the time to actually enjoy it. Time is finite; money is not.
The Value of Time
Timothy Ferriss, in his book, The 4-Hour Work Week says, “To enjoy life, you don’t need fancy nonsense, but you do need to control your time and realize that most things just aren’t as serious as you make them out to be.”
That’s why prioritizing the things you do things based on money will often backfire. Instead, base everything you do on what kind of time it will cost you.
What will it take you away from that you really would rather be doing? Some things, of course, have to be done that we don’t want to do. However, most of those things can be outsourced and worked around the most important things on your to-do list. Most things can simply wait.
People who are truly successful in life realize the truth of the limits of time and they do everything they can to make the most of the time they have. That’s why some of the most successful people you know are so productive.
Successful people often live by their calendars and schedules. That might seem unromantic but the truth is, scheduling in work and fun will make your life better by leaps and bounds.
In fact, get out your calendar right now and first schedule in all the things you want to do with your family and for yourself that are not related to work. Once you’ve done that, you can fit in work around those things. That’s the entire point of becoming an entrepreneur - to have freedom, but it’s important that you remember what constitutes freedom. Not money, but time. How much is your time worth?
As a business owner, you should NOT be doing your own bookkeeping. It's time to finally have time for things that will increase your revenue. Let's chat about how the Bean Counters Bookkeeping team can handle your books.