The 5 Little Known Expenses Of A New Business
The 5 Little Known Expenses Of A New Business
When planning your startup's financials, profit and loss or cash flow, there are a few little known expenses that aren't visible to new entrepreneurs unless they've run a business before. Listed below are 5 little known expenses that one should be aware of when creating financial projections or planning for their business' future:
Employer Payroll Taxes
Once employees are hired onto a company, the employer's financial responsibility does not stop at paying the employee's salary. Every time a business runs payroll, it also has to pay federal and state employer payroll taxes.
If you're not already enrolled in a payroll management software that can calculate these fees for you, my favorite resource is Gusto's payroll calculator, which helps you calculate your payroll taxes based on your payroll size.
Worker's Compensation Insurance
Each state has varying requirements when it comes to an employer's responsibility to purchase worker's compensation insurance for its employees. Some states mandate that an employer purchases worker's compensation insurance once it hits a certain number of employees, some require insurance for quarterly payroll amounts that meet a certain threshold, and other states do not mandate it at all.
To learn your state's requirements for worker's compensation insurance, you can visit your state's department of labor division, or visit the US Department of Labor site for more information.
Unemployment Tax
If a startup has employees, they'll find themselves paying federal and state unemployment taxes. These taxes accrue in an employer's unemployment tax account, and pays unemployment to any employees that tap into it. The benefits one receives for unemployment vary by state. To learn about your state's unemployment benefits, visit your state's department of labor division.
State and Federal Fees & Filings
Every company is responsible for attending to their state and federal filings and its related fees every year. For example, nonprofits in the state of New York are required to submit a Form 990 to the federal government at the end of their fiscal year, as well as submit a CHAR 500/Annual Filing form (along with the associated fee) to the state of New York.
To determine what your company's required fees and filings are, search for state and federal requirements according to the type of company you are (LLC, S Corp, etc.).
Corporate Tax
If you are a registered corporation (except an S Corp), you will have to pay a year-end tax on your profits. Refer to Form 1120 from the IRS to determine the amount in taxes you'll have to pay at the end of the year.
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