Growing your business presents many new possibilities, but also new challenges. When a business in Washington State grows to employ more than 50 people, several tax-related responsibilities come into play.
Understanding these tax obligations is necessary for ensuring compliance and avoiding penalties.
Employer Shared Responsibility provisions
Under the Affordable Care Act, employers with 50 or more full-time employees must offer health insurance coverage that meets specific standards. If an employer does not provide this coverage, they may face penalties. The IRS imposes an “Employer Shared Responsibility Payment” if the coverage is not affordable or does not provide minimum value.
Washington state unemployment insurance
Once a business employs 50 or more people, unemployment insurance contributions become more significant. Washington State requires businesses to pay into the state’s unemployment insurance fund. The amount an employer pays depends on their experience rate, which varies based on the business’s history of laying off employees. With a larger workforce, managing layoffs and unemployment claims becomes more critical to control costs.
Payroll taxes and reporting requirements
As the number of employees increases, so does the complexity of payroll tax management. Employers must withhold federal income taxes, Social Security and Medicare taxes from their employees’ wages. Washington does not have a state income tax, but businesses must still manage federal payroll taxes and submit regular reports to the IRS. Additionally, the state requires employers to contribute to the state’s workers’ compensation fund, which provides coverage for employees injured on the job.
FMLA compliance
For businesses with 50 or more employees, the Family and Medical Leave Act also comes into play. FMLA requires covered employers to provide eligible employees with up to 12 weeks of unpaid leave for specific family and medical reasons. Washington State has additional family leave requirements, such as the Paid Family and Medical Leave program. Employers fund PFML through payroll taxes.
Organizations with 50 or more employees become recognized as applicable large employers by the IRS. This presents new responsibilities for staying informed and preparing to handle the added complexities of tax obligations and reporting requirements. By doing so, you can maintain compliance and continue to grow successfully.