Category Archives: Legal Issues

Washington’s Paid Family and Medical Leave Program.

PFML_Employer_OverviewWashington is soon to be the fifth state to offer paid family and medical leave benefits. All workers will no longer have to choose between caring for their loved ones and making ends meet. They can dedicate their time away from work to be the best caretaker they can be. In return employers have access to an inexpensive benefit, save on payroll costs while the worker is on leave, and reduced employee turnover costs.

Workers can begin taking leave in 2020, but next year employers will have some actions to take.

First, employers need to withhold premiums from paychecks starting with the first check in 2019. These premiums are split between employers and workers. Workers foot most of the bill, but employers with 50 or more employees have a portion to pay also. (Employers with fewer than 50 employees don’t have to pay premiums but are still responsible for collecting and remitting the workers share.) Premiums are paid to the Employment Security Department by employers quarterly, starting in 2019. Learn more about premiums on the Premiums page.  Continue reading

Washington business registration renewal letter scam.

Misleading Letter vs. Official Letter

Businesses in Washington should be aware of a possibly fraudulent letter claiming to be an official bill for annual business registration fees.

One letter received by an Edmonds-based business directed the business to send $121.86 to a post office box in Olympia. The letter stated, “your state annual report will not be filed until payment is received.”

The misleading letter did not include the Office of Secretary of State logo, as an official letter from the Office of Secretary of State would – see the example pictured above.  Continue reading

What are the qualified business deductions under the Tax Cuts and Jobs Act?

tax deductionsThe Tax Cuts and Jobs Act (TCJA) created a new 20% deduction for pass-through entities. Though the IRS has not fully interpreted the new rules—which won’t go into effect until the 2019 tax season—many of the implications are clear. This article’s companion piece examined what qualifies as a Pass-Through Entity (PTE).

This blog hopefully sheds some light on how PTEs will be impacted by the new law.

Why a Deduction for Pass-Through Entities?

Since their inception, pass-through entities have been a popular choice for entrepreneurs, especially after the 1986 Tax Reform Act (TRA). Better known as President Reagan’s second tax cut, the TRA was passed by Congress to simplify the tax code and adjust the federal tax brackets.  Continue reading

Is there an embezzler in your company?

One of the joys of running a small business is how close you and your employees can become. For many entrepreneurs, their staff is more like family. That’s why it can be so painful to think that one of your employees is an embezzler. However, employee fraud is more common than you may think.

In fact, the majority (55 percent) of embezzlement takes place at companies with fewer than 100 employees, according to a study by insurance company Hiscox.

But that’s not all. In addition to being disproportionately affected by embezzlement, small companies also face disproportionately large costs when they are robbed. Consider this: One incident of embezzlement costs small businesses a median of $289,000. Could your business take a hit that big?

Read more here

Ask SCORE: How are pass-through entities affected by the Tax Cuts and Jobs Act?

2018 tax lawsThe passage of the Tax Cuts and Jobs Act (TCJA) brought renewed focus upon pass-through entities (PTEs). In spite of their widespread popularity, PTEs are commonly misunderstood. While thought of primarily as small businesses with few employees that generate a fraction of overall business profits, the truth about PTEs tells a very different story.

As it turns out, pass-through entities are the most popular structure in the US, employing millions of workers and churning out billions of dollars in annual revenues.

This article will demystify many of the misconceptions about PTEs and explain how the TCJA will affect these companies—and the US economy—in the future.  Continue reading

Services subject to sales tax in Washington.

From the Washington Department of Revenue website… 

There is a misconception that services are not subject to sales tax. This article clarifies that some services are indeed subject to retail sales tax. Following is a listing of services that are subject to sales tax when provided to consumers.

Construction services (WAC 458-20-170)

  • Constructing and improving new or existing buildings and structures. Installing, repairing, cleaning, improving, constructing and decorating real or personal property for others
  • Cleaning, fumigating, razing or moving structures, including painting and papering, cleaning and repairing furnaces and septic tanks, and snow removal
  • Clearing land and moving earth  Continue reading

Ask SCORE: Is a worker an employee or an independent contractor?

by Joe Heinrich and Guy Towle, SCORE Volunteers

As mentors to SCORE clients, we are often asked by our clients, “Should I hire this person as an employee or engage them as an independent contractor to do the work I have for them?” Often, our immediate response is to suggest the least costly alternative, which is to engage the person as an independent contractor as then the client can avoid all the payroll taxes associated with an employee.

However, this advice does not take into consideration the very restrictive State of Washington statutes as they pertain to the determination of an employee vs. an independent contractor. So, let’s take a look at the applicable law.  Continue reading