How to Start Payroll for Your Business & Open a Retirement Account with Jessica Jarecki & Taylor Schlenker

In this week's blog of Aligned & Ambitious, we are going to tackle the “not so sexy” side of business. I’m referring to all things payroll and retirement. I am really excited to have Jessica Jarecki, who is an ADP District Manager, and Taylor Schlenker, a Retirement Specialist, joining me today. Jessica and Taylor share all how to start payroll for your busness, as well as retirement accounts. They also debunk a few common myths and fears around these topics.

But before we dive on in, let me introduce myself. My name is Taylor Slango and I’m the host of Aligned & Ambitious Radio and a business coach who helps women make major bank through their online businesses. 

So if you’re an ambitious millennial, wanting to get more out of life and learn how to combat those who doubt you along the way, stick around. This blog post is for you!

And today, we are going to talk all about payroll and how to start a retirement account. Although this topic may sound intimidating or even boring, I can guarantee you that it’s not. When it comes to running a business, it’s key that you understand more about this. 

Jessica shares things to keep in mind if you are unsure when to get on payroll.

You may be wondering when is the best time to get on payroll, and when I had asked Jessica about this, she shared that there are a few things to take into consideration. First and foremost, if you currently have employees you are paying, you have to be on payroll. This is to ensure that you comply with the IRS. However, if you are an individual just paying yourself at the moment, your CPA should determine this. Your CPA will take into consideration your current profits. 

If you are an S Corp, you are required to be on payroll as well. Jessica ultimately advises that you should determine when to get on payroll based on the advice of your CPA, but keep in mind that it’s also required if you are filing as an S Corp. I know for me, this is a huge reason that I joined the payroll train. I knew I would be filing as an S Corp to save on taxes and that getting on payroll would be a prerequisite to the process. 

The benefits of getting on payroll vs. utilizing Paypal and regular bank transfer.

I also wanted Jessica to dive a little bit into the benefits of how to start payroll in your business vs. managing funds from a Paypal or doing bank transfers. Jessica shared that it’s essentially the same concept as when to get on payroll, if you fall into the categories mentioned above, such as an S Corp, you must be using a payroll provider service regardless. Along with that, there are some great benefits for you as a CEO and for your team. If you are using a payroll provider like ADP, they ensure you are following all proper compliances with the IRS. This by itself can save you a ton of headaches. Not only that but having a payroll provider is a great way to showcase proof of income. Down the road, if you find yourself applying for a loan, buying a house, needing to show your proof of income, having payroll will further prove your business to be legit and reputable. With payroll, you can also start offering benefits, PTO, and establishing your company in a more professional tone.

Debunking myths and fears around payroll.

Jessica told me that oftentimes she sees the cost and expense of payroll being the hesitation for people. Jessica wants people to understand that if you are self-employed, your taxes are higher as opposed to you being on payroll. This is due to the administrative costs through ADP being eligible as a write-off and also saving you in the long run if you do get caught being off payroll. The penalties for not being on payroll are much greater than being on payroll. Jessica makes it a point that they never want to sell on fear, however, it is truly scary as a business owner when you discover all the little things you have to abide by. There’s a lot that goes into running a business, and that’s why payroll providers like ADP are here to help you. 

Another myth and fear Jessica is approached with often is that people assume they’re too small as a company to start payroll. She says this is simply not true, no company is too small. I can attest to this because I got started on payroll before I even had any employees. If you guys have been following me for a while, you know that I preach all about Kajabi and how it’s the primary platform in my business. This is the same with payroll. It’s really great because whether you hire someone part-time or full time, you can simply set them up in your payroll rather than dealing with Paypal invoices each month. 

Another huge thing I noticed from getting on payroll is how much it’s helped me when it comes to taxes. I’m paying the taxes as I pay myself, this makes the tax season much less stressful since I’m preparing for it. Being on payroll has brought me a lot of tax financial relief, especially considering that I’m not a huge numbers person or a payroll expert.

Taylor shares tips on when you should start considering a retirement account.

Taylor is a retirement specialist and she says a lot of the time when it comes to starting a retirement account, it’ll depend on how much you make. Taylor says that they have a lot of clients who’ve just started on payroll and might not be showing a lot of income yet. For example, a client could be making about $30,000, however, if they contribute just 2% of their salary, they could end up with $75,000 in about 30 years. Ultimately, Taylor believes the earlier you start, the better. If you start earlier, you will see an impact over time. 

Taylor also points out a concept called Catch Up Contribution, meaning that if you are over 50 years old you can contribute over the regular limit allowed around 401k and simple IRA plans. Whether it’s 1-2% of your salary, the average rate this compounds is about 8-9%. In the long term, you will see a huge benefit to starting sooner, rather than letting your money sit in a savings account with a very small compound rate. Having a retirement account is a great place to put your money if you are looking to grow it at a rapid pace, but don’t necessarily want to put it in a stock market or let it sit around. 

Differences between 401k and Simple IRA plans.

I asked Taylor to share some differences between these two accounts, 401k and Simple IRA. Taylor says one of the most profound differences is the maximum amount of funds you can contribute. When it comes to Simple IRA, the maximum you can contribute before the age of 50 is $13,500. If you are over 50, you can put away up to $16,500. With 401k, the maximum you can put away is $19,500. If you are over 50 with a 401k, you can put away up to $26,000. 

Other things to consider are the cost of the plan and flexibility. With a 401k, you can take out loans without a penalty. This is a technique known as Profit Sharing. Taylor says that regardless of all the differences, there is truly a plan for everybody. If you are unsure this is going to be a good fit, that’s why Jessica and Taylor are here. They want to learn more about your situation and determine what would be best for you. I know I always say to make decisions today for the business you want tomorrow, not for the business you have today. Think ahead and think about the future. 

How to Start Payroll for Your Business & Open a Retirement Account with Jessica Jarecki & Taylor Schlenker: Main Takeaways

I hope learning more about Jessica and Taylor’s knowledge around payroll and retirement accounts brought you a lot of value. I know that for me, I’ve had an incredible experience with ADP so far. My biggest advice to you as you read this post is to not put this on the back burner. I promise that the longer you wait to start on payroll and your retirement account, the more stress and the more mess you’ll have to deal with. 

ADP has tons of resources to help you, be sure to connect with Jessica and Taylor. You can reach Jessica via email at jessica.jarecki@adp.com – they are incredible and they will do everything they can to figure out what will best support your needs.

Thank you so Much for Reading…

Thanks for reading! If you liked what you learned, connect with me on social too at Facebook, Instagram, or start working with me! 

Then share this blog post with an entrepreneur who needs to start implementing payroll into their business and get more knowledge on retirement accounts.