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The Employment Side of Starting a Business: Hiring Employees

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

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 located all throughout the country. He provides accounting, payroll, CPA, incorporation, and tax services.

Hiring Employees  – Key Points

  • When hiring employees, you can choose to hire either employees or  contractors to work 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, medicare, and unemployment tax payments.
  • Use a payroll service provider to make mandated state and federal payments as well as monthly or quarterly filing of relevant taxes.
  • Monthly, quarterly, and annual employer tax returns may need to be filed.
  • A business owner can have a solo 401(k), but if you are employed and run a business, there are limits to what you can contribute to it.
  • Putting money away in a retirement savings account reduces your tax obligation.

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

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