Growing Your Small Business: What Entities Do You Need to Pay?

As a small business owner, it’s critical to understand what entities you need to pay as you add employees and grow your business. This can be tricky and complex! The following post comes from our Lead Accountant, Adrienne Kaylor, our resident expert of all things payroll.

Growing Your Small Business: What Entities Do You Need to Pay?

Most small businesses need to hire employees at some point, especially if they are looking to grow. As an employer, it is your responsibility to withhold certain taxes from employee’s paychecks and forward to the government on their behalf. There are also payroll taxes that you, as the employer, must pay. Here’s a list of government agencies you should be paying if you have employees.

IRS

941 Tax Deposits – form 941 is used to report the federal withholding, social security and medicare withheld from employee’s paychecks, as well as the employer portion of social security and medicare. The IRS requires employers submit these taxes electronically either monthly or semi-weekly, depending on your pre-determined schedule. The 941 form can be filed quarterly.

940 FUTA – form 940 is used to report & pay Federal Unemployment Tax. FUTA is paid entirely by the employer and is due annually, unless your liability during the year reaches $500. Once your liability reaches $500 for the year, you are required to deposit at the next quarterly due date.

State Unemployment

WASUI – Here in Washington State, we pay unemployment insurance to the WA Employment Security Department. WASUI is paid entirely by the employer for each employee’s wages up to $47,300 (also called the Taxable Wage base for 2018) and is due quarterly.

If you are located outside of Washington, check with your state unemployment agency on their regulations and rates for your employees.

Workers Compensation Insurance

WA Labor & Industries – In Washington State, our workers compensation insurance is a state-sponsored program through WA Labor & Industries. Rates are determined by your risk class multiplied by hours worked and is due quarterly. You can deduct a portion of the premium from employee’s paychecks to reduce the employer burden.

Not all states require workers compensation. If it is a requirement in your state, check with the agency to determine if there is a state-sponsored program. If not, you can obtain a workers compensation through a private insurance carrier.

Are you an employer that needs help with these taxes? Joy Accounting has payroll tax specialists that would be happy to help you. Please call us at 425.213.4862!

Customer Success: More than a Feeling

March 1st is our three-year anniversary here at Joy Accounting! Special thanks to our team members, our customers, and everyone who has supported us. What better way to mark our anniversary than by sharing what we know about a topic near and dear to our hearts – customer success.

At Joy Accounting, we believe in asking a lot of questions, both of our customers and ourselves, to ensure continual improvement in every aspect of our business. Most of these questions center around one central theme – how do we ensure that our customers are experiencing success, an all-too-elusive goal for too many small businesses? Helping our customers obtain this ‘holy grail’ drives everything we do in our business.

But before we can help our customers, we work with them to define what success looks like in each case. Finding this “True North of Success” involves, of course, consistent tracking and improvement on tried-and-true metrics (including profitability, employee turnover, etc.). But the more challenging aspect involves identifying the aspects of success which are unique. Discovering these individual success markers involves answering some simple but profound questions covering everything from why the business was started in the first place to what life values are most important. If you are a father of four young children, for example, a critical success factor could be spending more time with your kids as they grow up. We find that the personal side of success is every bit as important as the more obvious business metrics.

No small business owner wants to continually spin their wheels, grinding their way through year after year without ever experiencing the fruit of their labor. Despite this, anyone who owns a small business experiences ‘spinning wheels’ mode at least occasionally and many are perpetually in this mode. At Joy Accounting we really strive to help owners take a step back and get off the wheel!

Recently in one of our internal brainstorming sessions our team came up with a number of characteristics that make a successful business. These recommendations to success are by no means exhaustive; please leave a comment if you have any additional ideas!

5 Recommendations for Small Business Success

Ensure your company Mission, Vision, and Goals are clearly articulated and consciously pursued

Many businesses fail because the owners don’t set their goals or purpose up front, and many others lose their way because the business veers off course due to a lack of strategic thinking built into the weekly cadence. As a business owner, it’s important to always have your vision, mission, and goals at the top of your mind, with every decision and tactic derived from these things.

Consider the following, among other questions. Why did you go into business in the first place? Who are your customers and what are you doing to attract them? What kind of lifestyle do you want to live while you are getting your business going, and will this change in 5 years? How often do you look to see whether you are aligning with your mission/vision/goals, and what do you do if you aren’t on track? Without a specific blueprint and a focus on adhering to that blueprint, it’s easy to get blown off course and simply move to survival mode.

Keep a finger on the pulse of your business

Many businesses are constantly in ‘fight or flight’ mode, fighting fires all day, every day. If you don’t take your head out of the sand, your business can be a long way off from where you want it to be – even you are busy serving a ton of customers. As an owner, you absolutely need to identify your key metrics and check them, at least monthly.

Discover one or two things holding you back and focus on improving those things

Of course, the next step in keeping a finger on the pulse of your business is determining what the metrics mean – that is, identifying what can be improved.  If your profitability is low, is it because you are behind on invoicing or because your processes aren’t crisp?  Once you discover what is wrong, develop a process that works, ensure everyone is on the same page, and focus in a laser-like manner on correcting it. This is harder than it sounds, as these areas of improvement typically will come from a blind spot, so it won’t feel natural at first. Never fear, though, when you focus on improvement in this area and see improvement in a short time you will feel great and your business will be on a much better track. Then you can focus on the next area of potential improvement!

In addition to keeping up on metrics, small business owners should continually look for processes that are broken or inefficient and work on fixing them. One broken process can create a lot of wasted time, money, and resources, and it can possibly be the difference between success and failure.

Confirm that everyone knows their role in making the company successful

First, of course, you need to understand your own role in the business. As an owner, you need to spend some of your time thinking strategically, setting goals, and tracking against these goals. So many business owners that we work with are burning the candle at both ends trying to do everything themselves. Sometimes this is necessary in the short-term but ensure that you are building a business that works for the long-term, and start by ensuring you are spending your own time on the right things that will lead to success.

Beyond your own role, it’s critical that your employees know exactly what their roles entail. As the owner, you need to come up with a specific job description for each employee and utilize that job description to track employee performance over time. Additionally, always be noticing what each employee excels in and use that knowledge to continue to evolve their position (or move them into a new position altogether).

One thing is certain – the overall success of your company is dependent on all of your employees being on the same page, so an effective hiring process is extremely crucial.

Do what you are good at while leveraging advisers outside of your core competencies

Small business owners are almost always very skilled and passionate about their craft; so why do so many fail? Part of the reason is that it’s very tempting for small business owners to try to run all aspects of the business – even those that are not really within their core competencies. This could include Human Resources, Accounting, or Sales.

Obviously, a small business owner can’t outsource everything, so deciding on the right things to outsource becomes a critical success factor in the business. When do you know that you’ve chosen correctly? A few possible times are: 1) When the outsourced company you are working with really ‘gets’ you and feels like an extension of your own team, 2) when the company you are working with is helping you improve your profitability, or 3) when you are feeling more relaxed and at ease about your business because you are more informed about what is going on.

Of course, at Joy Accounting this is exactly the type of partnership we aim to provide for our customers! If you have any questions or would like to ask about our services, please call Terra at 425.394.9747 or email her at terra@joyaccounting.com.