Many electricians dream of staring a small business, but they need to understand how to lay the groundwork and make the best use of scarce resources. If the proper foundation is not put in place the business can fail especially during tough economic times.
One of the most important but least understood aspects of starting a business is Worker Compensation. Workers’ compensation insurance will pay employees who get injured on the job. The only state in the United States that doesn’t require workers’ compensation is Texas. Employers can purchase the insurance from companies that carry it, while a select number of states have a government run fund. Make sure to look into the details of your states regulations or speak to a PCG rep for more information about the specifics for your state. Workers’ compensation will typically pay for any medical expenses, rehabilitation expenses, and lost wages due to injury.
Taxes for small businesses can be confusing, but figuring them out beforehand is necessary to avoiding any problems. It is recommended that every business get professional tax help from either an accountant or a computer program. If you are the sole employee in the company you will have to pay self-employment tax. This includes estimated payments every quarter. You will also have to pay a larger portion of Social Security and Medicare because you are the employer as well as the employee. If you have other employees it is necessary to withhold money for Federal income tax, Social Security and Medicare, and possibly unemployment tax. Employers also share contributions to both Social Security and Medicare.
Setting up payroll is a big process. It also involves a lot from the above tax plan. Your tax part of payroll included getting an Employer Identification Number and having employees fill out W-4 forms to figure out any withholding. To complete payroll you will need to set up a payment schedule, figure out overtime and other benefits, and set up vacation and sick time. Companies usually pay on a set schedule of weekly, bi-weekly, or monthly checks. The IRS has withholding charts available to calculate tax based on payment schedules. There are also state regulations on overtime pay that you need to check. Once you figure out payroll it is time to send in your payments to the IRS. There are professional payroll companies that handle all of the work for you and PCG specializes in finding the best company perfect for small business owners and contractors just like yourself.
Figuring out workers’ compensation and payroll, including taxes, will be one of the bigger foundational moves for your electrical company. These are steps that most small business owners don’t find pleasant, but they are necessary. There are professionals available to help in each area, so don’t hesitate to get what you need to bring you through the process.
