Nothing is inevitable, except death and taxes. Thankfully, there’s nothing inevitable about spending your precious time focusing on your taxes.
For many SMB owners, a DIY approach to taxes can be costing you money. No one is denying that being on top of your taxes is essential for an SMB, but that doesn’t mean that you have to do the work yourself. Could there be a better way?
Table of Contents
Small business tax 101
101 classes typically offer a quick guide to a subject, but there really is nothing quick about understanding SMB taxation. The list of taxes an SMB needs to be on top of is long.
SMB taxes you need to know about
- Federal income tax
- State income tax
- Self-employment tax
- Social Security and Medicare taxes
- Federal income tax withholding
- Federal unemployment (FUTA) tax
- State workers’ compensation insurance
- Unemployment insurance tax
- Federal excise tax
- State property tax
- Capital gains tax
- Sales tax
- Estimated tax
- Energy tax incentives
- Excise taxes on use and consumption
- Gross receipts tax
- Dividend tax
If just reading that list made your eyes glaze over or your blood pressure skyrocket, you’re not alone. Understanding such a wide range of different regulations, exemptions, deductibles, and so on is a huge task, but it’s essential if you are to remain compliant. That’s why tax specialists and accountants exist. It is a full-time job, but it doesn’t need to be your full-time job.
A PEO offers all the expertise you need to outsource your tax planning, which can make a real difference to your business.
Save DIY for home decor – the hidden cost of taking on SMB taxes yourself
As an SMB owner or leader, you’re not afraid of hard work and you’re used to learning new skills and taking on responsibilities. You’re more than capable of learning enough about SMB taxation, eventually, to do all your taxes yourself. In most cases, however, you still shouldn’t.
However much time and energy you are willing to devote to your business, there is still an upper limit to the amount you can get done in any given week. The time that you spend learning about and working on your taxes is time you can’t spend doing other tasks that are essential to your business.
Working on your taxes means that you may struggle to find time for work that only you can do. This includes:
New business meetings
As an SMB owner, you have a pivotal role in bringing in new business. New clients need to see your face and hear from you exactly what your company can offer them. Spending less time worrying about your taxes leaves you with both more time and more energy to find new clients.
Rather than thinking about taxes, you could be refining your sales pitch and meeting more and more clients.
Inspiring and role modeling for your team
Your team is essential to the success of your SMB, but they rely on you to show them what you need them to do. To get the most out of your employees, you need to get to know them, understand any issues they might be facing at work and be available for them to bring great ideas or obstacles to the table.
All of those things are difficult to achieve if you’re stuck in your office fighting with seven different spreadsheets and an SMB tax guide that resembles War and Peace. Outsourcing your tax lets you focus your energy on your staff, which can pay dividends.
Being a spokesperson/face of your business
Owning an SMB often leaves you inextricably linked to your business. You are the spokesperson and face of your business, and that can be time-consuming.
Spending your time promoting your business is usually far more productive than doing your taxes. Other people can help with your taxes. No one else can represent your company the way you can.
Doing strategic financial planning
As an owner or leader, your role lies in strategic thinking and planning, not the day-to-day grind. Making complicated, strategic financial decisions can help to dictate the overall direction of your business, with wide-reaching consequences.
No one else knows your business better than you do, so no one else can make those kinds of decisions. Focusing your energy on planning for your company’s growth is essential to achieve the kinds of results you are looking for.
Assessing your product/market fit
Most people start their SMB because they believe that they have a great product or service to offer to their clients. In the early days of your business, you probably spent hours on end thinking about your product and how you fulfilled the needs of your target client. And it worked.
Assessing your market fit and your product (and making any changes or improvements that you find) isn’t just for start-ups. It’s how you keep and grow your market and ensure your clients remain delighted… and loyal. Daydreaming about taxes might make you feel like a responsible business owner, but daydreaming about your product will make you a successful one.
Aren’t you more excited by these tasks than the list of taxes?
Unless you have an unfulfilled childhood dream of becoming a tax specialist, you probably don’t want to spend day after day researching the ever-changing tax regulations. Especially if that costs you business growth.
Taking the smarter route and outsourcing your tax issues is both good business sense and more rewarding. Outsourcing tax issues to a trusted partner ensures that your tax affairs are in the hands of experts, making sure that you don’t pay more than you need to. It also frees up your time to work on the parts of the business that you enjoy and excel at. This is the secret to sustainable business growth.
Who can help with my small business tax?
When we think of our taxes, most of us think in terms of income tax, property tax, and so on. For these, you will usually want to find an accountant and build a strong working relationship.
We would argue that, although it’s important to get these right, they’re not the most important taxes for your business. Employment taxes can have a much bigger impact on your business than any other, and it’s essential that these are correct and that they are administered seamlessly.
How a PEO can help with small business employment tax
Getting your employment taxes right is important to ensure that your SMB is fully compliant, but for once compliance isn’t actually the biggest risk in your tax affairs. Employment taxes have a huge impact on your employees, and failure to get it right can have devastating consequences.
Employment taxes are a matter of trust for your employees. Getting them right can have a huge impact on your ability to retain the loyalty of your staff… or even to retain them at all. Staff loyalty and retention are directly related to productivity, meaning that any damage to either of these two factors will likely impact your bottom line.
The ideal situation, for you and your employees, is for employment taxes to be almost invisible. You’ll never receive accolades or a parade from your staff for getting them right. But the minute they begin to question them or worry about whether you’re getting them right, you’re beginning to lose their trust.
Carelessness, errors, or delays in employment taxes can cost you, valuable employees, making this an ideal task to outsource to experts.
A PEO can take over payroll and tax filing as well as employment taxes. A great PEO partner will process your payroll for you every month. Reliable timely payment is essential to ensure staff confidence in you as an employer. The right PEO partner will also be able to pay your local, state, and federal employment taxes too. This can include state worker’s compensation insurance and unemployment insurance taxes as well.
Importantly, as a co-employer, a PEO has as much motivation to get your tax right as you do.
What is co-employment and why does it matter?
A PEO partner becomes what is known as a co-employer. This means that they are jointly liable (with you) for any non-compliance around many areas of employment law.
The PEO will typically become the employer of record (EoR) and will be responsible for employment-related taxes. Knowing that your PEO partner shares the risk of non-compliance with you offers a high degree of confidence in their determination to ensure that all your taxes are absolutely correct.
As large organizations offering services to many different companies, PEOs have the time, and motivation, to keep fully abreast of all changes to tax laws and regulations and the local, state, and federal levels.
Are you ready to lighten your load?
If you’re ready to spend more time focusing on the parts of your business that you enjoy and that encourage growth, we’re ready to help. As a specialist PEO broker, we have a huge range of programs available. We can help you to find the perfect fit for your business. With our help, your PEO partner will do the hard work and all relevant tax and insurance payments will be made with every payroll. It really can be as easy as that.
You don’t need to waste any more of your time on small business tax. If that sounds appealing, contact us today.