The Employment Side of Starting a Business

Find out more about starting your own business

We are continuing our conversation on the ABCs of starting a business, and we will follow the progress of a fictitious newly formed Yoga Studio. In episode 128, we looked at the business structure, and today we focus on the employment side.

With us is Cory Johnson from Cory W. Johnson, CPA, LLC which is located in Silver Spring, Maryland. He has about 200 individual clients and about 30 business clients all throughout the country, providing accounting, payroll, CPA, incorporation, and tax services.

Key Points

  • You can either have an employee or a contractor working for your business.
  • The front desk worker is probably an employee while the yoga instructor is most likely a contractor.
  • Look for guidance to help you determine whether someone is your employee or a contractor.
  • In addition to salaries, payroll-related expenses include social security, medical care, and unemployment tax payments.
  • Use a payroll service provider who will make the mandated state and federal payments as well as do monthly or quarterly filing of relevant taxes.
  • You need to file monthly, quarterly, and annual employer tax returns.
  • A business owner can have a solo 401(k).
  • If you are employed and also run a business, there are limits to what you can contribute to a solo 401(k).
  • Putting money away for retirement reduces your tax obligation.

Listen in and find out Cory’s best tip on doing due diligence.

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