It’s Not Just Tax Season – It’s Deadline Season
Tax season isn’t really anybody’s favorite time of year – not even the legions of accountants and preparers who earn their living by working inhuman hours for a month or more in the run up to April 18.
If anyone has a reason to complain about the Ides of April, though, it is small business owners. April 18 is the deadline for filing personal income taxes, which of course is a hassle enough on its own – but it also falls on, before, and after a succession of other tax and reporting deadlines. Taken together, they are enough to cause plenty of headaches, consume a lot of time and energy, and increase the likelihood of mistakes on the part of business owners.
Small businesses’ employees probably aren’t aware of it, but March 15 is actually the tax filing deadline for corporations and S corporations, a full month before personal taxes are due (sole proprietorships and single-member LLCs still file on April 18). The March 15 deadline falls just before two headaches facing almost every small business owner four times per year: Quarterly SUTA filings and payment and FUTA payments.
SUTA (State Unemployment Tax Act) and FUTA (Federal Unemployment Tax Act) reporting requirements and payments are no joke. By the end of April, businesses need to submit in-depth documentation along with an amount equivalent to a substantial percentage of every employee’s earnings to date. Federal rates come out to 0.60% to over 2% on each employee’s first $7,000 in earnings. SUTA rates are variable, based on employer experience from under 1% to over 12% depending on your location.
For most businesses, unemployment taxes are a lot to pay out in a single quarterly payment. As part of our services to our clients, Trion enables a more balance sheet-friendly “pay as you go” process, allowing payments to be evenly prorated throughout the year. Along with handling the onerous reporting requirements, this takes a significant strain off of companies who’ve got still more deadlines to worry about.
You’d be forgiven for thinking that this was enough to worry about – but these are tax issues we are talking about, so of course there’s much more. Somewhat helpfully, the IRS has published a tax calendar for employers. While not especially easy to understand or user-friendly, it does provide a reliable resource for many of the deadlines most smaller companies are likely to face throughout the course of a year.
Trion’s clients frequently find the range of deadlines, obligations, and due dates to be challenging under the best of circumstances – and in a changing regulatory environment, that effect is intensified. Successfully managing to meet IRS and state requirements demands constant vigilance, lots of planning – and a good deal of knowledge and experience doesn’t hurt, either. We do our best to put our knowledge to work for our clients in any way we can; we can’t take on all their tax issues, but handling SUTA, FUTA, local municipal income taxes, and other complex payroll task tasks, we can make the deadline relay race a lot easier.
Is Your PEO Licensed? It Better Be
In the Human Resources field, September is significant for more than just the Labor Day holiday. For PEOs, it’s also the deadline for renewal of State of Michigan licenses.
Professional Employer Organizations operating within the state are required to receive their licenses by September 1 in order to remain compliant and to avoid an escalating range of significant penalties. Since the PEO licensing law took effect in 2012, the net effect has been a steady reduction in the number of PEOs doing business in the state. Increasingly stringent requirements and the need to maintain over $100,000 in working capital have forced many smaller and less reliable companies from the market.
While the numbers of less stable, less established PEOs have diminished as a result, a considerable number remain – including some that try to sidestep licensing, and the licensure requirements, altogether. Such companies typically work with a small number of employees and clients, and do their best to remain “under the radar” where regulations are concerned. They manage to maintain stable, longstanding relationships with their established clients – until suddenly they don’t.
When an unregulated PEO fails, the ripple effect can affect many people outside of the organization – most notably the PEO’s client. Apart from the considerable and immediate legal ramifications, a company can suddenly find itself saddled with a wide range of unforeseen obligations and burdens – liability issues, unpaid wages, unpaid premiums, unfiled paperwork, and more – that can put its very existence at risk.
The 2012 licensing law was enacted in an effort to prevent such scenarios. In the wake of some catastrophic PEO collapses prior to regulation, there was a broad consensus that something had to be done to protect workers and businesses alike from underfunded, incompetent, or unscrupulous outsourcing firms. The 2012 regulations sought to establish a baseline capability and quality standard for professional employer organizations, and the annual licensure provides a measure of protection for companies that entrust their vital human resource functions to outside providers. Companies that can’t or won’t meet the licensing standard undermine that protection.
Companies operating within the law have advanced the PEO industry, and have provided immeasurable benefit to the business community. Today’s best PEOs have helped their clients improve efficiency, improve compliance, and cut costs, helping to strengthen the business community as a whole. But “Caveat Emptor” – “Let the buyer beware” – still applies; where non-licensed PEO’s continue to operate on the margins, there is still the potential for disaster for client companies that neglect to do their due diligence.
Sure, the prospect of saving a few dollars, cutting a few corners, or not disrupting an established business relationship can be appealing – but an unlicensed PEO can be putting your business at mortal risk. Now more than ever, it’s essential to check a PEO’s licensing status before starting – or continuing – a working relationship. The licensing standards aren’t just some arbitrary bureaucratic hassle; they’re a vital layer of business protection, and can literally make the difference between stability and insolvency. So check out your PEO, and make the switch to a stronger, more stable, licensed company if you need to. The business you save may be your own.