One of the main concerns for small business owners is how they are going to get paid. There are certain rules that have to be followed depending on how your company is set up.. So let's break it down.

If you are a LLC or a sole proprietor the IRS  says you cannot pay yourself through payroll. However, if you’re a S corporation or C corporation you should pay yourself through payroll. If  LLC's and sole perpetrators can't pay themselves through payroll, what can you do? You should set up a payment schedule and write checks to a draw account. By cutting yourself a check, it will allow you to pay yourself the proper way.

According to Entrepreneur there are two main ways to figure out how much to pay yourself. You can either pay yourself as much as your worth or just enough to get by. Either way you should consult with your tax professional.

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Technology - Friend or Foe?

I see small businesses in South Jersey that waste so much of their hard earned money on banking the old fashioned way. For one of my clients, it costs a total of $75  a month  for stamps, envelopes, and checks in order to pay employees and vendors. While this may not seem like a big number to many, it quickly adds up. Besides wasting money on paper products, doing banking online is much more time efficient. We are all busy and taking the time to type things out or run to the bank, even put things in the mailbox takes up precious time.

With technology quickly advancing, some of my clients are still apprehensive about banking online. Even though it can be scary, it can provide a  business with a lot of time and cost cutting opportunities. Security is the first step, in my opinion, to make sure that you are doing your online banking correctly.  US News and World Report reminds us that changing passwords and protecting your information is key. Change your password often and make sure it is unique. Also avoid clicking through links in  emails. Within emails, there could be phishing messages that could try and steal your information.

 Overall I understand taking this step of going online can be scary and cause apprehension, but trust me, in the long run, both you and your small business will be thankful for all the time and money you save.

For a complimentary initial consultation give Janine's Bookkeeping LLC a call at 609-910-2300

At Janine's Bookkeeping LLC,  we make your success our business.

Employers Take Caution

As an employer you may have many different types of people work for you. When it comes to how you classify them for payroll, the name can be important.

Employee: a worker with a set number of hours, tasks, and works directly under your company guidelines. These people are paid at regular intervals and payroll taxes apply to both the employee and employer. They are issued a W-2 at the end of the year.

Independent Contractor: a worker that does work for you but they are their own separate business. They have their own supplies for performing the tasks needed and set their own hours. They also have several people they do the same work for as they are doing for you.  These people are paid usually when the work they perform is complete and no payroll tax is paid by the employer.  They are issued a 1099 at the end of the year. 

From these two distinctions, an independent contractor sounds like the best and most cost efficient way to get work done. However, the government has a very close eye on businesses with an abundance of self-employed workers. Because you as the employer are not paying any tax on the independent contractor, the government wants to make sure that the proper classifications are being made.

If you have any questions about the proper steps to take or your business books, call Janine’s Bookkeeping today at, (609) 910-2300.

To read further on these topics, check out:

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee

http://www.irs.gov/uac/Employee-vs.-Independent-Contractor-%E2%80%93-Seven-Tips-for-Business-Owners