You’ve always dreamed of owning a bakery, ever since your grandmother shared her secret recipe for sour cream pound cake, the one with the fresh cherry filling. Opening day is fast approaching. You’ve gotten the funding, the permits, leased the space, hired staff and are finalizing everything on your checklist.
Coverage Packaged to Meet Your Needs
Have you considered the different types of business insurance you’ll need? You’ll want to consider a Business Owner’s Policy, which is an insurance package made up of several insurance policies. It can be customized to include policies such as General Liability Insurance, Business Personal Property and/or Building Coverage, based on your individual needs. Packaging insurance in this way ensures you get all discounts available to you, and makes sure that there are no gaps in insurance coverage. It can also help ensure that you aren’t paying for a policy or coverage that isn’t applicable to your business.
As the owner of a business that offers a retirement plan to its employees, it behooves you to periodically consider whether a different retirement plan provider would be more beneficial to your organization. Before you do extensive legwork, and certainly before you make any decisions, it’s important to formulate a game plan because no two plan providers are alike. As plan sponsor, you want to find a plan that fits your circumstances.
First things first
Before considering other providers, carefully review your current situation. Clearly identify and understand why you’re unhappy with your current plan and its services, as well as the improvements you’re looking for if you make a change.
It’s the time of year when business owners are approached by college students seeking summer internships to acquire skills and bulk up their resumes. It can be a symbiotic relationship, with the intern gaining experience in their field of study and the employer getting assistance on tasks that might not get handled otherwise. Prior to new rules published by the Department of Labor (DOL) earlier this year, unpaid internships could be perilous territory for employers who agreed to hire interns without paying them.
The new test outlined by the DOL—called the primary beneficiary test—is used to determine if a worker can be properly classified as an unpaid intern, or instead, should be covered under the Fair Labor Standards Act (FLSA) and be paid minimum wage and overtime. The test adopted by the DOL has already been in use in four federal appellate courts, most recently the Ninth Circuit Court of Appeals. The DOL’s switch to the primary beneficiary test creates a nationwide standard.
The establishment of a 401(k) plan is one of the most important steps an employer can take to benefit their business, their own retirement, and that of their employees. Tax and other financial benefits accrue to the business, as well.
A Must-Have to Attract and Retain Talent
The most recent annual Metlife employee benefit trends study found that 72% of employees consider a 401(k) or other retirement plan a “must-have” benefit, ranking second only behind health insurance coverage. In the current full employment market, offering that benefit helps small business employers level the playing field in attracting and retaining the best talent. And with the high cost of employee turnover, a 401(k) plan offers an affordable benefit to help keep employees on board.
Helps the Employer Plan
Business owners focused on running and growing a successful business may not take the time to establish a plan to help themselves prepare for retirement. It’s critical to address their own retirement early on, so when it comes time to spend a little more time on the golf course or with the grandkids, they’re not reliant solely on the proceeds from the sale of the business. By planning ahead, they can get started accumulated assets to supplement retirement income.
Last year, nearly 27,000 charges of sexual harassment were filed with the Equal Employment Opportunity Commission (EEOC). This number doesn’t include charges filed with state and local agencies or situations where employees went directly to an attorney, and many employees who are victims of sexual harassment or are affected by it never report the incidents at all.
Victims and witnesses of harassment often refrain from reporting because the harasser has the power to retaliate or because the organization has not set up adequate channels for reporting. In other cases, victims report the harassment, but nothing is done about it. The harassment is excused, and the complaints are rebuffed. Word gets around that the organization tolerates harassment, and people cease reporting it internally. They either keep quiet, file charges with a governmental agency, or seek out an attorney.
Your business is booming. In three short years, you’ve grown from a solo landscape and lawn treatment service in a home office to a full-blown professional suite with an office manager, administrator and a team of professionals who work all over the city. With three new hires this week, you’ve reached 16 employees. Congratulations!
Did you know that when you cross the threshold to 15 employees, certain federal laws apply to your business? From our HR Support Center, here is a brief summary of what you need to know about them:
Your new employee, Anna, starts today. Your onboarding package includes a Form W-4, the Employee’s Withholding Allowance Certificate, which you’ll collect from her and use to ensure she has the correct federal income tax withheld from her paycheck. If your business is located in a state with a state income tax, you will also provide her with the appropriate state withholding form.
You also give her a Form I-9, Employment Eligibility Verification. This form, and the accompanying documents Anna provides, is used by the federal government to verify her identity and employment authorization.
Those are the basic forms your new employee is required to fill out. So you’re done, right?
You, the employer, must also report Anna as a new hire to your state and the federal government.
What Exactly is “New Hire” Reporting?
New hire reporting was established in 1996 by the federal government as part of welfare reform. Under this Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) employers are required to report newly hired and re-hired employees within 20 days of their hire or re-hire date to the federal government as well as designated state agencies. All employers are required to report new hires, including public, private, not-for-profit and government organizations. While federal law does not require reporting of independent contractors, many states do.
“I’ll only hire independent contractors, so I won’t have to deal with taxes and overtime.”
If you have had that thought, you may be operating under the false assumption that you can call someone an independent contractor, or mutually agree to that title, when they are in fact employees subject to federal and state withholding as well as employer-paid taxes. Employees are also covered by overtime rules and entitled to workers compensation insurance coverage. You could have significant penalties imposed by the Internal Revenue Service (IRS) and other government agencies for the misclassification, even if it is unintentional.
What determines if a worker is an Independent Contractor?
The IRS publication covering the classification of employees and independent contractors says that the degree of control the employer exerts over the worker determines how they should be treated. When examining the overall relationship, factors that provide evidence of the degree of control exerted fall under three basic categories:
Behavioral control looks to how the worker does the job. If the employer dictates where and when the individual works, as well as what equipment, tools and methods they use, then it is likely an employer-employee relationship. Conversely, if the worker is given an objective, but uses their own methods to achieve work results, then an independent contractor role probably exists.
When staffing your business, you need to consider whether your employees are “exempt” or “nonexempt” from being paid overtime. The Fair Labor Standards Act (FLSA) sets out federal guidelines on exempt and nonexempt classifications. Most states have their own wage and hourly rate laws you will need to check out as well.
The FLSA requires that most employees receive at least minimum wage for each hour worked and overtime pay for hours worked over 40 in a workweek. Employees entitled to both of these are considered “nonexempt,” while, generally speaking, salaried employees who do not receive overtime pay and/or minimum wage are considered “exempt.”
Helps Employees Withhold the Correct Amount from Their Paychecks
If you’ve noticed a bump in your take home pay since the new withholding tables went into effect, you’re not alone. The Treasury Department estimated that 90% of taxpayers would see higher paychecks once the new tables were implemented. But, depending on your situation, you could be under-withheld. When you file your 2018 tax return next year, you may owe more taxes and potentially could be subject to underpayment penalties.
Conversely, if you haven’t adjusted your withholding allowances in a while, you could be over-withheld and get a big refund check next tax season. (More than 7 in 10 taxpayers fall into this category, receiving an average refund of over $2800!) While it may be nice to see that extra influx of cash once a year, perhaps you would be better served with a little more money each pay period to spend or invest as you wish.
The updated withholding calculator put out by the Internal Revenue Service (IRS) yesterday will help you figure out if you’re getting too little—or too much—taken out of your paycheck using the new tax tables. A revised withholding worksheet was also issued. Either tool can help you determine how many withholding allowances you should claim on your Form W-4, which tells your employer how much to withhold from your paycheck each pay period.
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