We are joined by Alexia Matak from Payroll Experts, they offer award-winning, cloud-based human capital management solutions that allow you to leverage technology to streamline every part of your employees’ lifecycle. A proud partner of the Kronos Workforce Ready platform and a proud sponsor of the Jump into Paradise Retreat, they bring together best in class solutions with personal, one on one support for employers of all sizes.
Biggest Takeaway You Don’t Want To Miss
The second you even have one employee on your payroll you should look into partnering with someone like Payroll Experts, someone that you know is taking full responsibility of payroll taxes to avoid penalties on being late. There are laws in place that determine if someone should be classified as an employee, you can perform a common law test if you are not sure if someone falls under an employee or an independent contractor. Payroll and payroll taxes can be the biggest liability for any business owner.
Show Highlights
- How do I know when it is time to partner with a payroll service?[2:50]
- Do I need to pay taxes at different times when I have employees? [4:55]
- Can I have my employees sign an agreement saying they agree to be treated as a 1099? [8:25]
- Is it true that employees cost more than independent contractors? [13:25]
- What are the top three compliance areas I need to be aware of when I have employees? [16:00]
Special Offer
Free payroll implementation for any audience member who joins the Payroll Experts family, just go to https://www.payrollexperts.com/exclusive-offer-for-jump-consulting/
Links
- Payroll Experts: payrollexperts.com
- Employee Quick Start: jumpconsulting.net/employee-quick-start/
- Jump into Paradise Retreat: jumpintoparadise.com/
- Jump & Scale Webinar: jumpconsulting.net/scale
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Transcript:
This is episode 144 of Bella in Your Business. This episode is brought to you by my free webinar, Jump and Scale Your Business. It’s my three-part training series all dedicated to finding and attracting the right kind of people that will scale your business. Did I mention it’s free? Listen, you have to attend this if you want to grow your staff, you feel like you’re being held hostage, you have high turnover, you feel burnt out, or you’re just not seeing the results you want. Join me for this three-part free webinar series. Register now at jumpconsulting.net/scale. I’ll see you there.
Welcome to Bella in Your Business, where Bella will discuss anything and everything about your pet sitting business to help you land on target. So get ready — Bella’s got your chute. Let’s jump.
Welcome to Bella in Your Business. My name is Bella Vasta, your host today, and I’ve got a very long-term friend with me. I was just trying to figure out how long I’ve known her, and I think it’s about 10 or 12 years. Alexia Maytak is joining me from Payroll Experts. They offer an award-winning cloud-based human capital management solution that allows you to leverage technology and streamline every part of your employees’ life cycle. She’s a proud partner with the Kronos Workforce Ready program, also a proud sponsor of the Jump into Paradise Retreat in the summer, and you’ll be meeting her there. She brings best-in-class solutions with personal one-on-one support for employees of all sizes and kinds, and I can definitely attest to that.
Alexia, welcome to the show. Thank you so much for having me. That was a beautiful introduction and it’s wonderful to see you. And yes, I cannot believe how long we have known each other. Just absolutely wild. I know. I remember, I think you actually came to my condo that I used to have with my roommate, and it was after I had a horrible experience with one of the big boxes. Of course, you caught me at the time where you’re like, “Yes, Bella, I hear that all the time.”
But I didn’t know that there were other options out there. And I became like a payroll expert lifer from then. It might not have been as cheap as doing it myself online through QuickBooks or something, but it mattered to me, Alexia, because I knew that I had that peace of mind. I knew to just give it to you guys and that was your problem. It was no longer my problem. Absolutely. Yeah, what we’re here to do is help shoulder the weight. Exactly, exactly. And Lord knows we’ve got a lot of weight to shoulder when we’re a business owner.
So why don’t we take it back to our audience who’s listening — maybe they have been doing their own payroll, or maybe they’re just about to start with employees, or maybe they’re switching from ICs to employees and were just cutting checks before. They’re terrified about all these payroll taxes. How does one know when it’s time to bring someone like yourself on board?
Well, definitely I’ve seen enough over the 16 years that I’ve been in this industry that has scared the living lights out of me. The penalties and interest that are out there for potential late tax payments for taxes that you owe once you have employees — the second you have even one employee on your payroll, quite frankly, I would look to partner with a payroll service bureau like Payroll Experts. You need someone who’s taking full liability and responsibility for the accurate filings and payments of those payroll taxes.
The late payments — the way that the penalties work — it runs anywhere from 2% to 15% of your payment, and that’s as short as within just a day of being late. If you’re over 15 days, it goes to 15%, and they charge interest on that as well. It’s just not worth it. For the cost of a good lunch, you can partner with an organization that shoulders that liability for you. They’re experts. Some people say, “Well, I only have one employee.” Quite frankly, it doesn’t matter whether you have one or 50 — you still have the same tax deposits and the same organizations you owe.
The second you recognize you have a W-2 employee that you have a tax liability on, that’s when you partner with payroll.
I’m actually embarrassed to admit this, but I’ve never kept track of all of the things because I’ve always had you guys — or now I have a bookkeeper that does it for me. So break it down for those listeners who are like, “Well, what do you mean?” I pay my taxes quarterly and QuickBooks tells me what I need to deposit. Isn’t that enough? I seem to remember a previous conversation we had where you said that there were monthly payments we have to make for taxes and that things just change randomly — and that we’re responsible to know that it changes and make proper adjustments. Could you elaborate on that?
Absolutely. There are a lot of moving parts. The first thing for business owners to understand is the defining moment of when you actually have an employee on the payroll — a W-2 employee — whether that’s yourself (maybe your accountant or CPA has recommended that the way your organization is structured would be a better tax situation for you to pay yourself as a W-2 employee), or if you’re hiring someone else. Once you’ve got a W-2 employee, even if it’s yourself, you now have 941 payments that go to the IRS — Social Security and Medicare taxes, both employee and employer portions.
There’s also federal and state unemployment tax, as well as state withholding tax from the employee. There are a lot of taxes, different wage thresholds, and deadlines. Knowing when to make these tax deposits is when it’s really helpful to have a partner like Payroll Experts on your side who’s actually doing it for you.
If you start handling things yourself, you could be classified as a monthly depositor if your tax liability is low. Once your liability goes over a certain threshold, the government wants their money faster, and you become a semi-weekly depositor. Depending on your check dates, taxes may be due on specific days, and if you’re not paying attention to those thresholds, it can get out of your hands quickly.
Okay, you guys, I want to know right now — if this were a Facebook Live, I’d say comment below — but I want you to post wherever you’re listening to this. Is your mind just boggled right now? Because mine is. The minute you started saying 941, I was like, “What?” There’s so much! Then the fact that it’s not even black and white, like “Okay, when I make $10,000 I need to do something.” Who has time to keep track of that? And if we don’t, like you said earlier, we get penalized and charged interest.
Yep, that’s absolutely right. And one of the scariest things I learned early in my career is that there is no corporate veil for payroll taxes. The government is coming for their money one way or another. Your organization can’t just file bankruptcy and get out of paying those taxes. They will personally come after your home, your car, your assets. This isn’t something to mess with.
I think the most common reason is people think they’re saving a few bucks doing it in-house or with someone who “used to be a bookkeeper.” But you have to stay on top of it. All right — not to be fear-mongering, but that’s the truth.
Now, I know you also help with companies as they grow. One question we get a lot is: can I have an employee sign an agreement saying they want to be treated like a 1099? Then I could just avoid all this.
Wouldn’t that be nice? Unfortunately, that’s not how it works. The government won’t accept an agreement between two people saying it’s okay to do something out of compliance. There are very clear rules about when someone is considered an independent contractor versus an employee — behavioral control, financial control, and the type of relationship.
Behavioral means: does the company control what the worker does and how the worker does it? Financial means: are business aspects like payment, reimbursements, and tools controlled by the payer? If you’re providing tools and controlling how work is done, that’s an employee. Relationship factors include how ongoing the work is and if the person can hire assistants.
Anyone unsure should check the Common Law Test, which provides bullet points for both sides. For example: employees can be dismissed, while contractors have a governing contract; employees perform work personally, while contractors can hire help; employees perform services under your company name, while contractors perform services under their own business name.
Exactly — a true independent contractor will typically have their own registered business with a taxpayer identification number, not just a Social Security number.
Oftentimes, if I’m a true independent contractor working for you, Bella, you’ve hired me for a specific project with a contract defining our relationship. If I’m performing work under my own business name and tax ID, that leans toward contractor status. But if I’m performing work under your pet-sitting company’s name, that line starts to blur.
Certain industries have clear rules, but if you’re still confused, you can file IRS Form SS-8 to request an official determination.
That was really good. And if you don’t believe what she’s saying, go back to episode seven and listen to Joette White. She had independent contractors, got audited, appealed, and still had to switch to employees. The state said her staff weren’t contractors because the dog bowls were provided by her, not by them. If the government wants their money, they’ll get it.
So now, the biggest question: employees cost too much, right?
I’d recommend sitting down with a business consultant or payroll professional ahead of time. Plan your budget. If you plan on hiring five employees at $15 an hour, it won’t cost you $15 an hour — you have to match Social Security and Medicare, pay unemployment taxes, and workers’ compensation. It’s often 12–15% more than hourly pay.
Make sure you can afford employees before hiring them. The idea that employees cost too much — I get it, but it’s not optional. Your work relationship determines the classification. Know your numbers, plan for costs, and make smart decisions.
We were talking earlier about compliance areas. The three biggest ones are: 1) Payroll taxes — calculating, paying, and filing them correctly; 2) State-specific requirements — like pay frequency and final paycheck laws; and 3) Workers’ compensation — states decide if you need it, not you.
You can see how complex this is. That’s why partnering with professionals helps you stay compliant.
You need the right people on your team. Sure, you can find cheaper options, but it’s about risk tolerance. Partnering with experts gives you peace of mind and helps you sleep at night.
Any business owner knows they didn’t start a business because they love dealing with taxes and compliance — they started it out of passion. Let payroll professionals handle the rest. Payroll and payroll taxes are often the biggest liability in most industries. Get comfortable with whoever you partner with, because mistakes here aren’t small.
So if you’re afraid, don’t be. Reach out, ask questions, and get educated. If anything here made you question whether you’re doing it right, have a call or email Payroll Experts. They even have a special offer for the Jump Consulting community — just Google “Payroll Experts Jump Consulting” to find it.
Alexia, thank you. I can’t wait for everyone to meet you at the Jump into Paradise Retreat this July in Paradise Valley. Our theme is leadership — and you’ll be one of our sponsors and guests.
We’re excited to be part of it. We’re happy to be a resource — you don’t have to be a client to reach out. We can run cost calculations or help with registrations, tax IDs, and more. We also provide HR support, paperless onboarding, benefits enrollment, and a cloud-based platform to handle the entire employee lifecycle.
So, guys, really — reach out. You don’t have to be a client. If you’re nervous about hiring and want to know costs, just call them up and tell them you heard it on the podcast.
And remember — when life gets you down, always keep jumping.
Thanks for jumping with Bella in Your Business. For more information, free articles, and free coaching sessions, go to jumpconsulting.net. And remember — Bella’s got your chute.