Ho, hum. Taxes, recordkeeping and employment law are not the most exciting subjects you’ll encounter as a business owner, but they are among some of the most important. Whether you choose to handle these tasks yourself or outsource them to others, you must have at least a passing familiarity with the regulations and requirements you are expected to uphold. After all, it’s your signature on those paychecks and tax forms.
Federal Labor Laws
Employment Eligibility Verification Within three days of being hired, each new employee must complete Form I-9 from the Department of Homeland Security, U.S. Citizenship and Immigration Services, to verify his/her identity and eligibility to work in the United States. Download the form, instructions and a list of acceptable documents at www.uscis.gov.
The Fair Labor Standards Act Fair Labor Standards applies to nearly all U.S. businesses and requires companies to pay at least the federal minimum wage ($7.25 per hour) and overtime pay of not less than one-and-one-half times the regular pay rate after 40 hours of work per week. The act prohibits persons under age 18 from working in certain jobs and establishes the hours/times employees under age 16 may work. Some employees are exempt from some of the major requirements; consult the U.S. Department of Labor (www.dol.gov) for details.
Occupational Safety and Health OSHA laws require businesses to provide a safe workplace and, in many cases, to maintain records of job-related injuries and illnesses. Employers with 10 or fewer employees are exempt from most requirements, as are industries classified as low-hazard. Fines and penalties may be levied for non-compliance. Go to www.osha.gov for details.
Americans with Disabilities Act The ADA prohibits employment discrimination against qualified individuals with disabilities and requires that public accommodations and commercial facilities be designed to comply with specified accessibility standards. All businesses offering access to customers and/or employing 15 or more workers must abide by ADA rules. Visit www.ada.gov for details and to download the “ADA Guide for Small Businesses.”
Family and Medical Leave Businesses employing 50 or more must give certain employees up to 12 weeks of unpaid, job-protected leave per year (26 weeks for qualifying military caregivers) while preserving their health benefits during the period. Employees may take leave for the birth of a child; if they adopt a child or provide foster care; to care for a seriously ill spouse, child or parent; or if they personally suffer a serious health condition. Visit www.dol.gov/whd/fmla to download a copy of “The Employer’s Guide to The Family and Medical Leave Act.”
The U.S. Equal Employment Opportunity Commission The EEOC enforces federal employment laws that protect civil rights and prohibit discrimination based on age, disability, gender, race, religion or sexual orientation.
The Equal Pay Act The Equal Pay Act applies to virtually all employers and prohibits wage discrimination between men and women performing substantially equal work within the same workplace.
The Affordable Care Act The ACA requires all employers who provide self-insured health coverage to their employees to file an annual return with the IRS detailing certain information for each employee they cover. Specific insurance options and eligibility for tax credits to help underwrite the costs of providing coverage under ACA vary depending on business size and number of employees covered. Note: The federal health insurance program established by the Affordable Care Act in 2010 was under congressional review at the time of publication. Check for updates on health coverage requirements at www.healthcare.gov or www.irs.gov/Affordable-Care-Act/Employers.
State Labor Laws
New Hires Employers are required to complete a New Hire Reporting Form for every newly hired or rehired employee, full- or part-time, within 20 days.
Minimum Wage The 2017 Florida minimum wage is $8.10 per hour; tipped employees who meet the eligibility requirements of the federal Fair Labor Standards Act receive $5.08 per hour in addition to tips.
Workers’ Compensation Employers with four or more employees (full- or part-time) must carry workers’ compensation coverage for their employees. Different requirements apply for construction and agriculture.
Child Labor Workers under the age of 18 cannot work in hazardous occupations such as excavation, electrical work, roofing, mining, operating heavy machinery or motor vehicles, or around explosives, toxic or radioactive substances or dangerous equipment. Additional occupations are banned for children ages 14 and 15. Minors cannot work during school hours without an exemption.
Background Checks Private citizens or companies may request a state-only criminal history record check of an individual through the Florida Department of Law Enforcement website (www.fdle.state.fl.us) for a fee of $24 per case.
Records and Accounting
Although you’ll probably want to hire an accountant to prepare your tax returns and important financial documents such as those required for commercial loan applications, you can easily keep simple business records yourself using a prepackaged, computerized business bookkeeping system, such as QuickBooks Online or Wave. At a minimum, you’ll need to keep account of gross receipts, purchases, expenses, assets and payroll.
Online review sites and recommendations from friends can help you make an educated choice; just be sure that whatever bookkeeping system you decide on allows for easy monitoring of cash flow. Accurate cash-flow statements and projections can help you control spending, determine your break-even point and make realistic plans for future expansions of inventory, facilities and staff.
Get Your Free EIN
Every federal tax form must include the filer’s official federal ID number. If you are operating as a sole proprietor and do not intend to have employees, your Social Security number will suffice; otherwise, you will need an Employer Identification Number (EIN).
Obtaining an EIN from the IRS is easy and free; don’t be fooled by websites that want to charge you for this “privilege.”
To apply, simply visit www.irs.gov/businesses/small and click on the “Employer ID Numbers” link.
Personal Income Tax For sole proprietorships and partnerships, the profits and losses from the business are passed through to the owners and reported on their individual income tax returns. Sole proprietors report their business revenues and expenses on Schedule C, then transfer the net profit/loss to their Form 1040. Partners report their individual shares of the business revenues and expenses on Schedule E, then transfer the income/loss to their Form 1040. The partnership itself also must file Form 1065 and issue a Schedule K-1 to each partner.
Due: April 15. Quarterly estimates due: April 15, June 15, Sept. 15, Jan. 15
Self-Employment Tax All net profits derived from doing business as either a sole proprietorship or partnership with no employees are subject to federal self-employment tax, which is equivalent to the Medicare and Social Security taxes that employers withhold from their employees’ paychecks. Use Schedule SE to determine the amount owed, then transfer the figure to your personal income tax Form 1040.
Due: April 15
Corporate Income Tax Corporations are subject to this 5.5% tax and must file a return annually even if no tax is due. C-corporations pay the tax on Form F-1120.
Due: If your corporation owes more than $2,500 annually in Florida corporate tax, you must make estimated tax payments on or before the last day of the fourth, sixth and ninth months and on the last day of the taxable year.
Limited liability companies LLCs are classified as corporations for federal income tax purposes and must file a Florida corporate income tax return. LLCs that are classified as partnerships for federal income tax purposes are required to file a Florida Partnership Information Return (Form F-1065) if they are doing business in Florida and one or more of their owners are a corporation. In addition, the corporate owner of an LLC that is classified as a partnership for Florida and federal income tax purposes must file a Florida corporate income tax return.
S-corporations S-Corporations usually do not have to file a Florida corporate income tax return unless there is federal taxable income.
Due: April 1 (if the business’s fiscal year corresponds to the calendar year)
Reemployment Tax Floridians are required to report wages and pay taxes to the Reemployment Assistance Program if they paid at least $1,500 in wages within a calendar quarter, have employed one person for any portion of a day in 20 different weeks during the calendar year or are liable for federal unemployment tax. File Form RT-6 and pay to the Florida Department of Revenue.
Due: April 30, July 31, Oct. 31, Jan. 31.
Use Tax on out-of-state purchases When out-of-state sellers fail to collect Florida sales tax, buyers must make the payment on their own. The tax applies to items purchased out of state from Internet sites, mail order catalogs, auctions, shopping networks or toll-free shopping services. It also is imposed on items purchased out of state when the merchandise is shipped to a location in Florida. Use Form DR-15MO to make payment.
Due: First day of the month after the quarter in which purchase was made
Tangible Personal Property Tax An annual tax on personal property used for commercial purposes that is not included in the assessed value of the real property. Business inventory and state-registered vehicles are not taxed. The tax is paid on Form DR-405 to the county property appraiser. All new businesses must file their first year; thereafter, no additional filing is required if the amount of tangible property is less than $25,000.
Due: April 1
Sales and Use Tax If your business will involve taxable transactions, you must register using Form DR-1 or at the Florida Department of Revenue’s e-file site. Businesses pay through electronic filing or, if sales and use tax is less than $20,000 per year, on Form DR-15. Businesses that have $1,000 or less per year to report may file quarterly; $500 or less, semiannually; $100 or less, annually. Note: Your county may impose an additional tax on transactions that are subject to the state sales and use tax. Report this surtax on Form DR-15 along with sales and use tax.
Due: First day of the month