Afraid Of The High Cost of Payroll Taxes? Why Paying Payroll Taxes Could Pay Off For Your Business
You might be put off by the idea of setting up a payroll, paying payroll taxes, and all the work and money that goes with it. Sounds like a LOT of extra money and responsibilities, doesn’t it?
And let’s be real…who seriously wants to pay MORE taxes?
But believe it or not, investing in payroll taxes carry several advantages that might make a huge long-term difference in your business.
What could paying payroll taxes mean for you and your business? They’re a big investment, so it’s important to know what they represent. Let’s get into that right here!
Payroll taxes consist of the following payments:
- Social Security taxes
- Medicare taxes
- Federal unemployment taxes
- State disability & Sometimes Workers Comp (varies from state to state)
When you are an employee of your own business, you pay in both. The employer taxes are fully deductible and the employee taxes are partially refundable.
Note that some of these taxes are paid by both the employee and the employe. (As an employee, I’m sure some of these taxes look familiar, especially if you’ve ever looked closely at your W2!)
But what do those taxes even mean? Without getting into the deep details, let’s talk about what these taxes represent. AND why it’s not all bad to pay them.
Social Security Taxes
Social Security taxes fund retirement, disability, and survivorship benefits. Now, we’ve all heard since we were kids that we won’t have SS benefits by the time we retire. But they are here for now. As far as I know they can’t make this disappear (not without huge outrage from us, anyway!). So whatever Social Security evolves into, you will have paid into it at some point! (BTW, Social Security isn’t just for retirees. It’s also important if you ever find yourself disabled, or if you or your earning spouse passes away.)
Medicare Taxes
Medicare tax funds the government’s Medicare program. This provides subsidized healthcare and hospital insurance benefits to retirees (you’re welcome, Nana!) LOL
Federal & State Unemployment Taxes
This provides unemployment compensation to workers who have lost their jobs. It’s insurance you can apply for later when you are laid off (and in some cases, fired).
State Disability Insurance (SDI)
SDI provides temporary benefit payments to workers for non-work-related illness, injury, or pregnancy. SDI tax also provides Paid Family Leave (PFL) benefits. (The stimulus is offering expanded benefits on this now.)
Workers Comp Insurance (WC)
Workers Compensation provides benefits if you get injured or sick from work-related causes. (I had to use this a few times working around sharp knives when I worked in restaurants!) It also includes disability benefits, missed wage replacement, and death benefits. Workers’ comp also reduces your liability for work-related injuries and illnesses.
So that’s a brief summary of what you’re actually paying when you pay payroll taxes!
Now, here’s the thing. A lot of benefits that payroll taxes fund aren’t the things you think about every day. Typically, we don’t care about things until it happens to us. Now with this pandemic, things have dramatically changed. Business owners want options to keep doors open and keep income coming in right now.
This is one of the biggest reasons to consider a payroll option for your business!
Are you ready to consider a payroll option for your business? If you’re curious about how much it costs, whether you’re ready, and what it takes to get started, let’s chat.
I partner with a payroll company, and play a large role in improving their systems and software. We offer services that can grow with your company, no matter where you are right now. We offer options for everyone from the solopreneur on up!
Our services include time tracking, benefits tracking, investments (401k) and HR support. We also either oversee your payroll or run it for you entirely. There is something for every need!
Remember, it’s never too early to plan your future. Set the right financial foundation for your business from the start. And if you have to go back and do some retooling, never fear–it can be done, and we can help!
So let’s chat! Book your call right HERE.
Until next time,
Love, Light, and MONEY, Honey…
Kaylee