Spend time on your business. Not running payroll.
Keyword has partnered with Payroll Hive to automate your payroll calculations, reporting, and filing.
Benefits of running payroll
Pay less in employment taxes if you are functioning as a sole proprietor
In the United States, by law you pay self-employment tax which is 12.4% on Social Security tax and 2.0% on Medicare tax. That is 15.3% that you are required to pay on top of your federal and state income taxes.
Example – if you make $100,000 in profit you would pay $15,300 in Social Security and Medicare taxes.
Strategy – Setup your business as an S-Corp to take compensation as distributions which is not subject to social security and employment taxes. Ideally you could take all $100,000 so you do not need to pay any of that tax. But the IRS knows about this loophole and if you are caught will fine you, pay a penalty on interest for taxes owed, and go back as far as they want and make you pay employment taxes.
Avoid the IRS penalties by using a combination of running payroll and taking distributions
If your business is an S-Corp, the right strategy is to take some of your income as W-2 pay so the IRS does not come after you for taking the rest as a distribution. Doing this correctly will save you thousands in taxes.
Example – if you make $100,000 in profit, you need to pay yourself about $40,000 and the rest could be taken as a distribution. If you were previously a sole proprietor paying $15,300, you would now only pay $6,120 in social security and medicare taxes.
1 in 3 employers are penalized for Payroll errors
According to the IRS, 1 in 3 employers have been penalized for payroll errors and nearly 40% of small business owners who do their own payroll taxes receive an average penalty of $845 every year form the IRS. You can eliminate this risk by using Payroll Hive to process your Payroll and at a competitive prices to a do-it-yourself payroll product.
Payroll Hive will do all of your payroll processing for you so you do not need to do any of the work but still reap the tax benefits.
Switching from do-it-yourself to full service
If you are already running payroll through a self-provider it is most likely costing you more than you realize. The time business owners usually need to put into doing payroll correctly can add up to be very costly. Also, penalties for incorrect payroll from the IRS are very common. According to the IRS 1 in 3 employers have been penalized for payroll errors and nearly 40% of small business owners who do their own payroll taxes receive an average penalty of $845 every year form the IRS.
Payroll Hive provides full service payroll at a comparable price to do-it-yourself products.
Pricing is a flat fee of $50 per payroll process if you have 20 employees or less.