What you need to know as an Entrepreneur
If you own a small business in Massachusetts, you’re not alone. With nearly 21% of people in the commonwealth employed by small businesses, according to an article on CBSNews.com, we have one of the highest small business employment rates in the country. The same story ranks Massachusetts as one of the 10 best states in which to start a business.
But the picture for entrepreneurs – and would-be entrepreneurs – isn’t all rosy.
A story on Inc.com, which was published in August of last year, states that 96% of businesses fail within the first 10 years. And the number one reason of failure? A lack of money.
Many entrepreneurs start their small business as ‘solopreneurs’. With an idea they’re passionate about – and often minimal funds – the solopreneur begins their venture as both sole proprietor and sole employee, managing every aspect of the business including its finances. When, after months – or perhaps years – of hard work lead to a satisfying level of growth and increased revenue, it’s time to start hiring employees.
While the finances of a company with its owner as the only employee are fairly straightforward, having employees dramatically changes that. You’ll be collecting money from your employees for state and federal income taxes, and Social Security and Medicare taxes. In addition to collecting and paying these trustee taxes, your company will be responsible for matching each employee’s Social Security and Medicare contributions, along with paying federal and state unemployment taxes. Massachusetts employers are also required, by law, to carry worker’s compensation insurance. Failure to remit trustee taxes can result in fines and penalties and in some cases even criminal charges.
If your business has employees but, like so many in our region, isn’t large enough to warrant in-house accounting staff, it’s time to engage a payroll company in Massachusetts.
Working with a Massachusetts payroll company ensures that you’re dealing with professionals who understand the ever-changing employment laws in the commonwealth. While employment laws used to apply to only larger companies – those with more than 100 employees – the new compliance issues impact virtually every business in Massachusetts. If your company isn’t complying with current employment laws in areas such as family leave, the Massachusetts Sick Law, and paying minimum wage, you could face costly penalties or an even costlier lawsuit.
Engaging a payroll company on Cape Cod or a South Shore payroll services company also means that your taxes are being collected each week and distributed to the proper government organizations on time. An unexpectedly large tax bill, which is due immediately, can become an insurmountable financial obligation for any business. Remember; it’s the lack of money which sinks most businesses.
So if it’s a shortage of money that threatens a business’s survival, you may be thinking ‘Why would I spend money on a payroll services?’
Unless you’re a financial or tax professional, the paperwork involved with your company’s payroll will likely require an inordinate amount of time. One late fee from the IRS or Massachusetts Department of Revenue can result in penalties and interest far greater than an entire year of payroll service fees. Depending on the size of your company, a payroll company’s fee can be as little as $25 per week; a nominal amount of money which allows your focus to stay where it should be…on growing your business.