The list of things we learned the hard way as new business owners is LONG. Things we thought were great ideas ended up being not so great. Actions we took that we probably should not have taken. Payroll tax education & payment. Just to name a few……
Very few poor decisions left lasting marks (thank goodness) but there was one decision that is easy to recall even 30+ years later.
Dean and I owned a cleaning service and we had 13 staff members. Our schedule was booked and aside from collection challenges from our large corporate client, things were going very well. So well in fact, that we purchased a boat and we named it WILD THING (that is a subject for another blog). Each week in the summer, we would like our team out and then spend Fridays and Saturdays on the Columbia River enjoying the successful life of a business owner. With few exceptions, things seemed to be running smoothly and we literally felt like we had ‘arrived’. That is, until THE PHONE CALL that would quickly bring us back to reality.
I answered the phone and was immediately engaged in a conversation with some official regarding payroll taxes. Payroll Taxes??? The voice on the other end of the line went on to say that I was in trouble and that we needed to take care of the amount we owed immediately or we would be fined and we would receive a tax lien. Tax Lien??? I was pretty sure the gentleman on the other end of the line had no idea who he was talking to, so I decided to ‘take control of the phone call. “What is your name Sir”, I asked- he responded (let’s call him Bob). “OK Bob, you must provide me with the proof that you showed up to clean any of these houses or apartments and I’ll be glad to cut you a check.” I did not wait for ‘Bob’ to respond- I quickly hung up the phone, lined out the team for the remainder of the week- and headed for the river, Wild Thing in tow. I did not give the call another thought until….
A few short weeks later, the result of my call finally arrived- a letter (not a nice letter) informing me that I owed somewhere in the neighborhood of $7000 (before penalties & interest) and that I was in jeopardy of having a tax lien and lots of fines. ‘Bob’ got the last word in.
In those days $7000 may as well have been One Million dollars- we did not have that kind of money and we learned the hard way that just because you never actually had the Payroll Tax Money that you are supposed to withhold from your staff’s payroll- you are accountable for sending that money to the government. Lesson learned: the Hard Way!
We did clean up that mess and eventually sold the cleaning service (and the boat!!). I am so very grateful for that experience because it has helped me to make sure we have things in place to help other new business owners avoid the same mistakes we made. If you have never employed people before, it is easy to MISS that you pay substantially more than the hourly wage the team member receives. Today we have a national program in place with a large payroll company so the business owners we serve can focus on their business and not get sideswiped by the ‘Bobs’ out there that want you to pay your payroll taxes!
Learning the lessons and gaining the business experience necessary to have a successful journey as a business owner can be even easier when you learn from other people’s mistakes! Before you buy the boat and take long weekends to enjoy the fruits of your labor, make sure you have all of your financial ducks in a row!
CLICK HERE or give my team a call @888-249-9919 if we can help with anything related to payroll or business growth and development.
