Don’t forget to pay yourself: Do the self-employed pay extra tax and other payroll questions answered


If you're self-employed or new to dealing with payroll and the taxes that come along with it, you need this webinar. Do self-employed people pay extra taxes? Does being an LLC or an S-Corp matter in how much you pay yourself or an employee? What taxes are you responsible for when paying a contractor or freelancer? Ro Williams is ready to answer these questions during this FREE 30-minute webinar.
We want to create a community around small businesses, so at the end of the talk, we’ll open it up to live questions from attendees. Tell us about you, your business & what you want to know!
Ro Williams, JD, MBA is the Tax Technology Manager at ComplYant. She is an experienced tax professional and has previously worked for both International Law and Public Accounting firms.
Note: This topic covers U.S. businesses only. Any information provided during this event is not intended to be taken as advice or to be perceived as a specific position on any subject of law or tax law.
Q&A
How does unemployment insurance affect payroll taxes?
So, unemployment insurance, it varies. It varies from state to state, what that amount is, how it's collected, and what it looks like. But one thing's for sure, FUTA is always there on that first 7,000. Just make sure you are paying your FUTA. Again, if you have a payroll provider, you won't have to worry about this. Make sure you're paying your FUTA up. Make sure you're paying your SUTA up if your state has it.
If I have employees, does that always mean I need to pay payroll taxes, or if I only use contractors, do I need to pay payroll taxes?
If you have employees, I guess the question is do you have employees, right? If you have employees, you have to pay your payroll taxes. It's not a question. Like I said, you can exempt yourself out all day, but you always have to pay that 15.3%.
If you have a contractor and then they're responsible for paying their own payroll taxes, they're just like you in essence. If you're a sole proprietor, in a partnership or in a single member LLC, they have to pay their payroll taxes based off of Schedule SE. So, they have a different world to worry about when it comes to contractors.
You are only really responsible for employees when it comes to employment taxes. If it's a contractor, you wouldn't have to worry about that. But understand that there's a strict regulation around employees versus contractors because there is that benefit of not having to pay all those taxes, that is one, you know, intense audit flag. So, if you want to play that game, then play it. But I would encourage you not to, not to ever play that audit game with them. If you have an employee, just say you have an employee and pay that expense and write off this expense as appropriate. Whereas if you have a contractor, you don't have to worry about all those employment taxes.
Webinar - Do the self-employed pay extra tax & other payroll questions answered
Introduction (00:12):
DeMei (00:12):
Hi everyone. Thank you so much for joining us for today's webinar. Today we're covering the amazing, super fun topic of payroll taxes. And before we start, I'd love to introduce myself to you. My name is DeMei. I'm a Customer Support Specialist here at ComplYant. Myself and my team answer user questions and service requests through live chat and email, and we also reach out to users directly to learn more about their businesses, their business needs, and the things that they're doing so we can continue to grow this platform in the ways that will best support them. If you're not familiar with ComplYant, it's a must-have tool for business owners that helps them to save for and pay their tax payments on time. In today's conversation, again, we’re covering tax laws and stipulations that come with hiring employees, specifically payroll tax. Hiring employees can be very exciting, but it can also cause a lot of headaches if you don't know what you're doing, you're just parlaying into that field.
So you can get signed up for an account in minutes at www.complyant.co. And that's C O M P L Y A N T CO to begin receiving reminders if you haven't yet. You can also find us on Instagram at ComplYant app, that's C O M P L Y A N T A P P, and on Facebook at www.facebook.com/complyantapp. We're so excited to have you all here to be part of the conversation we're having today with ComplYant's very own Ro Williams. As our Tax Technology Manager on the tax research team, Ro embodies the tax knowledge and know-how that springs from a passion for helping others take control of their business and their taxes. Thank you very much. Without further ado, Ro, whenever you're ready.
Ro (02:02):
Hi, and thank you all for joining us today. As DeMei mentioned, I'm Ro. I'm gonna talk to you today about hiring and payroll. The way I like to do things when it comes to a webinar is more so a side chat. So, I'm not focused on just throwing out a whole bunch of information to you, but giving you the information that will help you actually succeed in processing payroll and understanding what that's about. So, let's jump right into it.
So, we all know that tax in general sucks. I would like to make the bargain that, you know, specifically payroll tax sucks. Payroll tax is one of the most complicated tax segments and that's because it is so complex. Even with the name payroll tax, you don't really know if you're talking about payroll tax or employment tax.
#1. Check your business structure (02:53)
Ro (02:53):
The first thing we're gonna talk about when it comes to payroll is actually how your business structure matters when it comes to payroll. You can't just decide like, “Oh, today I wanna do payroll”, and go ahead and do it. That's not how it works. Not all businesses are created equally and that's so important when it comes to business entity structures. I recently noticed that small business owners get confused a lot about some of the payroll tax concepts. So, I wanted to break them down and not only break down those concepts, but also give a more so checklist of items that will help people when it comes to the payroll process because payroll is a huge pain. So, to focus on that, I gathered a list of questions that I've heard a lot with my time assisting business owners get their taxes in order, and I want to go through a couple of those too.
Ro (03:46):
So there are kind of like two parts to this webinar. There's this checklist that I'm gonna give you on how to actually functionally get payroll started and again, these are just the very bare minimum basics. There's so much more to cover. And to go along with this webinar, there are actually three or four blogs on our site that goes directly along with these. So, pop over there if you want in-depth questions. But along with the checklist, I'm gonna do a couple of FAQs, they're called Pay FAQs and these are just facts and knowledge about payroll.
Ro (04:18):
So, on the checklist, the first one is to make sure your business structure is set up for payroll success. What I mean by that is it's so important to understand that payroll is just not equal across all business entity structures. So, for instance, when it comes to an owner, the big perk of payroll is being able to write it off as an expense, right? This is called a wage or a salary. But when it comes to a sole proprietor or a single member LLC or a partnership, you just can't go and write off the payroll expense because one, the owner shouldn't technically be getting paid through the business in this fashion.
Ro (5:00):
The owner takes a draw, or they get a distribution. So, saying I'm a sole proprietor and I make around $60,000 a year in my sole proprietorship, of course, I make enough to live off my business. So why not go ahead and start doing payroll? Because you're a sole proprietor, you can hire an employee. However, because your business isn't set up under that tax structure, in order for you to deduct that payroll expense, it's just a draw. So, there’s not really anything tax enthusiastic about it. You can get that extra write-off. However, when it comes to doing your taxes, there's something called a step employment schedule that's scheduled SE and you will have the ability to write off half of your payroll tax. And I know we're getting into that payroll tax employment tax area.
Pay FAQ: Payroll Taxes vs Employment (05:54):
Ro (05:54):
So really quickly, payroll taxes versus employment taxes. Employment taxes are deposits reported to the IRS by employers on behalf of their employees. Payroll taxes are just a small piece, it's just a tiny piece of employment tax.
Think of employment tax as the whole house and payroll taxes as just the living room inside of the whole house. Payroll tax is typically taken from wages and salaries of employees and it's just FICA, it's just Medicare and Social Security when the IRS is talking about payroll tax. It's important for you to make sure that you're not confusing these terms because employment tax encompasses a whole shebang of things. Remember, employment tax is the whole house, so you have an income tax in there, you have federal tax in there, you have FUTA, you have FICA, and you sometimes have SUTA. So just make sure when you are thinking about employment taxes in terms of business versus payroll taxes in terms of business, you are isolating and separating those ideas from each other.
Ro (07:05):
Just to jump back to the business structure aspect. Sole proprietor, we can't write that off. That's a draw. And the same goes for a single-member LLC unless they make a tax election. If they make an S Corp tax election or a C Corp tax election, then that's a different ballgame. Then you do have that ability to write off your wages as expenses and you get that full benefit of that part.
Ro (07:31):
Remember though, when it comes to a payroll tax, you are only allowed to deduct a certain portion of that payroll tax. So even if you have employees, you can't deduct the whole match that you're doing with them because when it comes to payroll tax the Medicare, and the social security, there's this employee match that you do with the employee. So, make sure you're only writing off the portion that could be written off. You are not allowed to deduct that whole entire thing. I'm pretty sure it's... I feel like I wanna say 7.3, but I'm not a hundred percent sure of how much you can actually deduct. The self-employment tax, in general, is not 7.3, it's a little bit higher. But the self-employment tax, in general, is 15.3% and that sometimes catches entrepreneurs off guard because it's like, “Where did this come from? I've never seen this”. You're used to seeing it in your paycheck under Medicare and Social Security, that thing that you can never exempt yourself out of and never goes away. Now you have to pay that, but not only are you paying your portion because you are your boss, you are the employer and technically the employee you have to pay the whole shebang. So, it's not half of it anymore, it's the whole thing, the 15.3, I think it's 7.69, I think that gives you 15.3.
#2 Make sure you have an EIN and sign up for an EFTPS account (08:52):
Ro (08:52):
So, checklist item number two, and everyone loves to get an EIN, so this should be no problem. Make sure you have an EIN. It is so important to have an EIN when you're doing payroll because one, you have to report your employee wages to the Social Security Administration, and this is how they track it. Your EIN for your business is your social security number for your business. That social security number, it keeps track of everything that's going on with your business and it also helps keep track of payroll. Along with signing up for EIN, make sure you sign up for an EFTPs account. This account is, I believe it's sponsored by the IRS. It's a portal that they made for business owners to directly go and make payments directly to the IRS. And once you get your account set up, you go to the website, set up your account and you'll receive a pin in the mail. So, it's not an automatic thing. Make sure you're looking out for this pin. Make sure you're entering it in the time given because if not, you'll have to start that process over. And this is how you are supposed to pay your employment and payroll taxes.
#3 Register with your state (10:01):
Ro (10:01):
So, number three on the checklist is register with your state. Most states have payroll portals or websites that you have to go to set up for your employees. It's just easier to do it this way. Even some states don't even allow you to mail in the forms that you used to be able to mail in now, they'll make you set up an account with the state and connect that account to your payroll provider. So, what happens is now your payroll provider is in charge of sending all that information over to that particular portal that the state has designated for you.
#4 Sign up with a payroll provider (10:37):
Ro (10:37):
With that means that number four, please get a payroll provider. It's just easier, it helps with time, and it helps to making sure you're meeting your compliance standards. One thing about payroll is they do not play games with payroll. That's something that it just is a headache if you ever had one. The penalties associated with payroll are called trust fund penalties. These penalties can be personally liable on the employer. Everyone likes to get an LLC because it protects you, not in this instance and not when it comes to payroll. You have to pay your employees, you have to pay them in a timely manner, but also you have to pay the government of their share of that regardless if their share is in the size of income taxes, in the size of unemployment taxes, or in the size of FICA, the Medicare, and the Social Security. You have to pay the government and your employees in a timely manner, or you are going against all types of payrolls, statutes, and codes and it just becomes a big mess. And no one wants a big mess called trust fund penalties. So just do it the right way. Sign up with a payroll provider.
Ro (11:47):
Some payroll providers who are small business friendly are Gusto, Paychex, Namely, a new one that's out there, and QuickBooks, of course. QuickBooks is a payroll provider; you can process the payroll through there. And they sent all your payroll reports and, of course, ADP. For some of the bigger companies such as ADP, it does take a while to get used to the system. However, I like going with legacy companies like, you know certain things are gonna get done. You don't have to bed track with these companies, and they know how the payroll game goes. They know that if they miss a report then it's their fault and they have to pay that penalty fee. I like going with people who reassure you that everything's gonna be okay and if it's not gonna be okay when a fire does start, we'll help you put it out. So that's why I would just encourage everyone when you're ready for payroll, when you're ready to hire people, get a payroll provider to help you make sure you're meeting all your compliance standards.
Pay FAQ: Payroll Taxes for the Self-Employed (12:48):
Ro (12:48):
Another pay FAQ: What are payroll taxes for the self-employed? And I touched on this a little bit. Self-employed individuals must remit Social Security and Medicare taxes along with federal income withholding. This is different from a regular employee's payroll because you will be responsible for the total amount that is due. Remember I told you, they used to be split, but now you have to pay the entire amount. So, the self-employment tax rate is 15.3. The rate consists of two parts. It consists of 12.4% of social security and 2.9% of Medicare. Sometimes self-employed people feel as though they are paying an extra tax because instead of paying half of the 15.3 like they did when they were employees, they now have to pay that full 15.3. And sorry about that, that's just the cost of being the boss.
#5: Know the basics of an I-9 and W-4 (13:37):
Ro (13:37):
Checklist item number five: Know the basics of an I-9 and W-4. You find your first employee, awesome, you wanna get them started, wanna get them hired. And again, this isn't a contract person. Because for a contract person, we don't care about I-9s or W-4s. We care about W-9s, but we don't care about I-9s or W-4s with a contract person. So, this is an individual who the IRS considers as an employee, you're making their schedule, you're making sure they're hitting due dates, they are clocking in and clocking out. They are like the most of us. They have to be at work for a certain amount of time doing certain things. When you're ready to hire someone, you have to verify their identity, you have to verify they are a citizen. Unfortunately, you just can't hire anyone as an employee, even if it's someone overseas, you have to go through extra steps in verifying that person overseas. That's called an international employee. And there are special regulations to go with that.
Ro (14:38):
So, for a domestic employee, the I-9 is used to verify the identity and employment authorization of individuals hired in the US, and the W-4 is used to determine federal withholding income. The W-4 is not really a form you have to know, it's more so a form you have to know of because most business owners just don't know what to do with that form and it's completely okay. A lot of bookkeepers don't know what to do with that form, which is why it's so important to get a CPA to look at your books at the end of the year. But this form, it helps determine the federal withholding income. And that's important because of course if your employees underpay, they'll owe a ton at the end of the year or if there are overpaying, they'll be in a large refund. As an accountant, it's always best practice to try to zero out your liability versus your refund. But this form does the best it can at getting you where you have to be. So just make sure you understand the basics, make sure you fill it out and make sure you send it to where it has to be sent. And when it comes to payroll providers, usually this form is attached to their system, so you won't need an extra form outside of it. You'll still need the verification documents for I-9 verification, but usually, inside a payroll system, these two are pretty simple to go through.
#6 Become familiar with FICA, FUTA, SUTA (16:10):
Ro (16:10):
Checklist number six: become familiar with FICA, FUTA, and SUDA. A lot of acronyms. The tax has a lot of acronyms. So, FICA is the payroll tax. FICA is Medicare and Social Security. So those are the ones that you have to be most familiar with because I don't know why, but they tend to get people tripped up for whatever reason that is. When it comes to FUTA, FUTA is Federal Unemployment Tax Act, I believe. And basically, that is federal unemployment insurance. It happens very quickly; people usually don't notice it. This is a tax where it's only on the first 7,000 employees' payroll. So, after that, you never see it again. It's usually something that lingers or something that happens really quickly. But FUTA is only on the first 7,000 I believe of someone's payroll. SUTA varies by state. SUTA is a state and unemployment insurance tax act. So, they're similar in concept, different in nature. Because SUTA is variable based on the state that you are in. So, it can be 2% in one state, 6% in another state. But that's why again, you sign up for payroll services that your state has. That's why you go, and you make that portal. That's why you sign up for all that information because that information pertaining to likes SUTA will be in your portal more than likely.
Ro (17:53):
In Michigan, we have something called the Michigan Treasury. I feel like it's Outlook/Outpost, something, there's an o there, it's called an MTO. And here what happens is you report your withholding through the MTO portal. So, you decide you wanna hire somebody, you sign up for MTO, you sign up for the UIA, that's the Unemployment Insurance Agency. So those are two different portals because there's a lot of information happening. And at MTO you go ahead, and you file your withholding return and you let them know how much you held from your employee, and how much you sent, that reconciles out. The Unemployment Insurance Agency, you have to also send a file to them and you have to verify documents through them too, which is why it's always encouraged to make these portals for all your businesses in every state that you operate or have employees in.
Pay FAQ: Federal Payroll vs State Payroll (18:47):
A pay FAQ: What is the difference between a federal payroll and a state payroll? And that kind of goes back to FUTA and SUTA when it comes to payroll for states, different things are withheld according to state or local tax law. For most states, a state income tax and possibly a local income tax or state and employment tax are withheld. These amounts are withheld from an employee's pay and remitted to the appropriate agency. So, the employee typically never sees these items. You see it on your paycheck, but the money really never gets to you because they are taken by the employer and sent to the appropriate agency. And they do that because that's how the law is written. The law isn't written for them to give you your money first. It's written for them to show you like, “Hey, these were your dollars and these are the dollars we're taking”.
Ro (19:39):
These amounts are withheld from an employee's pay and remitted to the appropriate agency. Whereas with federal payroll, it is consistent FUTA or FICA and federal income tax. Usually, income tax doesn't change throughout the year, that's a rarity that happens. These numbers are very static. You know that this FUTA is coming out, you know that FICA is coming out and it's at 15.3% and you know where the income bracket is for your taxes to be taken out. Those will always look the same. You can work in five different states at one time and some states may have income tax, and some states may not. Those blanks are always left on your paycheck. But when it comes to federal across all five of those states, federal will look identical. The amount may change because your wage changes, but when it comes to FUTA, you know that it's taken up to that 7,000. When it comes to FICA, you know it's taken at 15.3% and you know that federal income tax isn't changing depending on your income tax bracket.
#7: Check if you’re withholding other payroll requirements (20:42):
Ro (20:42):
Item number seven: If your state has no income tax, make sure you are withholding other payroll requirements. So, some states just don't have an income tax. I believe Texas is one, maybe Florida. They just don't have it. And it's their prerogative. They have things that replaced income tax though. And so, I think when people hear like no income tax, you kind of think like, “Oh, I'm not getting taxed.” No, you're just getting taxed in other ways. They'll find a way to get a dollar out of you. However, even if you don't have income tax in your state, if you have payroll or if you're hiring people in that state, just make sure you are withholding the appropriate requirements for that payroll. If you don't have a payroll in that state, you still have to withhold the FICA, the FUTA, the federal income tax. And if the state has unemployment insurance, then you need to withhold the unemployment insurance not from the employee but based on the employee. Because typically unemployment insurance within a state is not derived from an employee's income, the employer pays that. So just make sure, even if you hire an employee out of Texas, so I live in Michigan, I hire somebody out of Texas because those are remote, that's a remote employee. Now you have to look at, okay, well is there a remote employee reciprocity rule? So, there are so many things when it comes to payroll, that's why it's important for you to make sure that you're withholding all of the requirements. Even if you know like, oh, this state doesn't have an income tax, they could have other things going on that you will be liable for. And remember, trust fund penalties are the worst penalties. Those are the ones we really do not want. If we can avoid any penalty in our whole existence, it is a trust fund penalty because they do not go away.
#8: Important state and federal payroll due dates (22:40):
Ro (22:40):
Checklist item number eight: Become familiar with important state and federal payroll due dates. And this is again, just keeping away from the penalty and liability range. Payroll has different dates and different important opportunities for you to meet based on your payroll status. So, if you are in California for instance, and you have payroll due dates in California, but they don't miss your payroll due dates for your federal compliance, that's perfectly normal. That's perfectly okay. That's why it's important for you to have a handle on all these different things. One way we help you with that is with our tax calendar. We show you when things are due, and we show you where to pay and how to pay and all that jazz. So whichever system you decide to go with, just make sure it is a system that you understand and can keep up with because the name of the game, remember it is to not get any penalties or late fees or anything like that.
Pay FAQ: Where can I learn about payroll tax? (23:46):
Ro (23:46):
I think this is our last pay FAQ. Where can I learn more about payroll tax? Again, at ComplYant we know that tax is complicated and we're here to help you with that. So along with this webinar, feel free to check out our glossary and our resource center for different information. If you want more assistance, feel free to reach out to customer success and they are awesome, they're here to help you. And with that, if there are any questions or comments, feel free to let us know.
Q&A (24:21):
DeMei (24:21):
Excellent. Thank you so much, Ro. Extremely informative as always. Stellar presentation here about major payroll tax takeaways. And it looks like we do have a few questions I can ask. I didn't see any come through the chat, but we do have a few. So we can jump into that. I just wanna take this moment to remind everyone that although we are a tax compliance software, we're not an advisory firm and any information that we provide in a presentation or in question & answers should not be perceived as advice. And you don't want to take that as we have a specific position on any subject of tax law. So, I will jump into the first one I'm seeing here. If no income is coming in, how would payroll taxes be paid? Or I guess maybe the question might be there if they should be paid or is there anything you would be due.
Ro (25:13):
So, if no income is coming in, there's nothing that can be paid out. However, you still have to file certain reports, you still have to file your withholding report and you still have to file if your, if your state has it, unemployment insurance report because these reports like they should show zero, right? They should be truthful in their nature, but they still give you a recorded account of saying like, “Hey, my business didn't have any employees this month.” So that still needs to be taken into consideration
DeMei (25:49):
Essentially, it's just like it's still part of your accounting. If there were in fact zero made, you wanna show that and that be clear so that they know that. So that there aren't any, like you said, penalties that get incurred because of that. Excellent. You did touch on this I think as well, but the next question I'm seeing is, would you say that completing payroll manually is better, or is it better to use a third-party service? And again, I know you touched on a few during your presentation.
Ro (26:16):
It's better to do payroll in general, if you have it, do it. I would prefer, I don't even... The time that it would take for someone to do payroll manually is insane. Don't even do that to yourself. There are so many shortcuts. Just sign up for QuickBooks. If all else fails, you know QuickBooks, they'll get you through something. It might not be everything, but they'll get you through something. So, in my opinion, just always resort to a payroll provider because there are so many nuances that come to a payroll and so many things you have to report. You don't want to be responsible for keeping up with a 9- 40 and 9-41 a 9-44. It's just so many acronyms and numbers. Just go ahead and get a payroll provider and you can pass all that onto them cause that's their responsibility now.
DeMei (27:08):
Excellent. Sounds great. Do not do payroll manually. Way too much work. How does unemployment insurance affect payroll taxes? And again, I think you might have touched on this as well, a little.
Ro (27:18):
So, unemployment insurance, it varies. It varies from state to state, what that amount is, how it's collected, and what it looks like. But one thing's for sure, FUTA is always there on that first 7,000. Just make sure you are paying your FUTA. Again, if you have a payroll provider, you won't have to worry about this. Make sure you're paying your FUTA up. Make sure you're paying your SUTA up if your state has it.
DeMei (27:43):
The next one I'm seeing here, what's the best way to plan for upcoming payroll tax expenses. Another one I think you spoke about.
Ro (27:52):
One thing I do wanna touch on about that last one is if you are self-employed, you don't pay FUTA, you don't pay that. That's only if you have an employee. So, if you're S corp, you pay FUTA. If you're just a regular LLC, remember, LLC with just you so that's a single member. If you're in a partnership, if you are a sole proprietor, you don't worry about FUTA because you technically are not an employee of your company until your company can actually claim you as an employee of your company.
DeMei (28:26):
And the next one was, what's the best way to plan for upcoming payroll tax expenses?
Ro (28:33):
Again, you can always use ComplYant, you can always use our calendar, our notices, or anything of that instance. Forecasting is an accounting tool that most accountants use. Not sure if a lot of bookkeepers use it, but definitely an accountant. Forecasting is just an awesome accounting tool. It helps you know your expenses, and your income, it helps you project in the best way possible using a determinative. I would say try as best as possible to forecast your expenses. If you plan on hiring someone, just know hiring someone, you're not just paying them, you are actually paying the state to have an employee, the federal government to have the employee. So, make sure that that's the route you want to go in. And this is a helpful way to use forecasting because sometimes you just need a virtual assistant that's not really your employee, but a contractor that'll save you tons. And employment is expensive and that's why there's a strict regulation by the government on employee versus a contractor. So just make sure if you are planning on hiring, you understand that not only is it time-consuming accounting-wise, it's time-consuming financially as well because you're entering a new territory where you have someone telling you how your employees should operate and how your employment rules should go.
DeMei (29:59):
The next question, I guess it has two parts. It says if I have employees, does that always mean I need to pay payroll taxes or if I only use contractors, do I need to pay payroll taxes?
Ro (30:14):
So that's kinda like what I was just saying. If you have employees, I guess the question is do you have employees, right? If you have employees, you have to pay your payroll taxes. It's not a question. Like I said, you can exempt yourself out all day, but you always have to pay that 15.3%. If you have a contractor and then they're responsible for paying their own payroll taxes, they're just like you in essence. If you're a sole proprietor, in a partnership or in a single member LLC, they have to pay their payroll taxes based off of Schedule SE. So, they have a different world to worry about when it comes to contractors. You are only really responsible for employees when it comes to employment taxes. If it's a contractor, you wouldn't have to worry about that. But understand that there's a strict regulation around employees versus contractors because there is that benefit of not having to pay all those taxes, that is one, you know, intense audit flag. So, if you want to play that game, then play it. But I would encourage you not to, not to ever play that audit game with them. If you have an employee, just say you have an employee and pay that expense and write off this expense as appropriate. Whereas if you have a contractor, you don't have to worry about all those employment taxes.
DeMei (31:36):
That was great clarity there. And then I guess the last one I'm seeing, I feel like it might be a simple answer, but if I'm not sure about payroll taxes, should I wait to hire employees?
Ro (31:49):
It depends on what you mean by not sure. If you're not sure, but you're gonna hire an accountant, why wait? If you're not sure and you are not planning on hiring an accountant, then yes, you should wait. There are just so many nuances and things to go with it. Feel free to reach out to us about the lay of the land for payroll tax. We're open to helping as much as we can. Of course, we can't advise, we can only assist. But yeah, I would go as far as saying, don't register for employees. Don't register for unemployment insurance. Don't register for any withholding until you are committed, and you understand, because I had a client who registered for unemployment insurance and I off-boarded them to another accountant when I decided to quit practicing privately. But this other accountant did not do payroll. And so, I guess something got lost in translation where the person hadn't filed their unemployment insurance report in months. Something that most states do is if you don't tell them, they'll just assume or they'll guess. It's just like the IRS when you don't file your tax return, they'll just start pulling information from wherever they can find it and build up one.
Ro (33:13):
Same thing with unemployment insurance. If you don't tell them, they're gonna go and assume and guess. It just became this big mess. We had to go through so many appeals and the hassle just was not worth it. Especially when you have like one employee, it's just not there. So, if you don't really know what you're doing, just consult somebody who is an expert in the field or who has knowledge on the field. And try to get them to help you before you jump in that big pool of trash because it really is. Payroll is one of those things where if you can avoid it, just avoid it for however long. I know most people can't with growing businesses and the benefit of writing off the payroll expense, but it is, it's a lot once you start going through it. So, you want to make sure you have a firm handle on what payroll is, what you need to pay, when you need to pay it, what forms mean what, and all that jazz
DeMei (34:10):
Could get very sticky very quickly. Excellent. Well, thank you, Ro. You are the best. I appreciate your time, and we appreciate your time and for putting together this presentation. And want to thank you all for watching. If you'd like to re-watch this discussion, you'll receive a link in your email to re-watch this at a later time. And for more information about ComplYant, like Ro said, we have lots of tools we can help you with. Or if you missed an opportunity to ask a question, feel free to email us at at hello@complyant.co and that's h e l l o @ c o m p l y a n t.co. We're happy to receive topic suggestions for upcoming webinars, as well as general questions you might have about the platform. And if you have feedback for us about how we can make ComplYant better, don't hesitate to get in touch with us about that as well. So, in closing, again, thank you all for tuning in. I hope you have a wonderful day and see you at the next one. Thank you.