Never doubt that the government is going to get its share of your money. Independent contractors get hit with the full force of payroll taxes. In a typical work environment, the employer will foot half of the taxes usually referred to as FICA. An independent contractor is the employer and gets to pay double.

The Federal Income Contributions Act includes payments for Social Security and Medicare. The contributions are deducted from gross income and are around 15.3% of that income amount.

Independent contractors (and all self employed individuals) will also be required to pay income tax on everything over $400 earned during the year. Because taxes are not withheld from the income, many states and the federal government often require the self employed individuals to make quarterly estimated tax payments.

The first step

all independent contractors should take is to make an appointment with a tax professional. The tax code can be complicated and it helps to have someone give guidance and explanations along the path. Payments to an account will usually be deductible on future tax returns.

The next step

is to set up a savings account to house the payroll taxes until it is time to file taxes in April. This account should receive at least 15% of all income. It might also be wise to set aside an additional 15% for income taxes if those are not being paid quarterly. This set up allows an independent contractor to earn interest on the money instead of allowing the government to use it for free.

A word of caution: all tax payers are required to pay 100% of last years taxes or 90% of this years taxes before the end of the year. That means that after the first year of being an independent contractor most people will likely be required to estimate taxes or pay penalties for underpayment.

The third step

is all about organization. It is important to keep good records on all expenses for the services of the independent contractor (mileage, conferences, office supplies and other items). A folder with multiple pockets can serve as a divider for the different categories. Receipts should be kept in order in the folder. This helps to make the tax preparation easier and more complete.

The final step

comes when it is time to file taxes. Self-employment taxes are calculated under the Schedule SE using the net income. Payment must be sent with the income tax return (or before April 15th). Late payments will likely result in penalties.

Anytime the government is brought into the mix it is a good idea to make sure all of the rules and regulations are followed to the letter. Getting a professional to assist with the payroll taxes for independent contractors is one of the most important (and most logical steps) to help insure what needs to be paid is paid on time and in the correct manner.

Handling payroll can be an expensive endeavor. The software available can also require specialized training. The resources that small business put into the administrative activities would likely be utilized better in other aspects of the day to day needs of the business.

Outsourcing payroll is one of the easiest and quickest ways to increase the productivity of the administration. Not only does it open up the amount of time available but outsourcing also has a number of other benefits as well.

· Save money. Hiring employees to handle payroll requires paying additional benefits as well. Using a company to outsource payroll is less expensive for small businesses.

· Avoid IRS difficulties. Outsourcing companies specialize in the administrative details. They understand the paperwork that is required for government regulations. Some companies even offer a tax penalty guarantee. Experts have estimated that around 40% of all small businesses pay some IRS penalties. That alone could make the outsourcing choice a simple one.

· No turnover delays. A change in an employee that deals with any aspect of the payroll could cause a delay in that payroll until a new employee can be trained for the job. Outsourcing companies have teams of experts that can handle all of a business’s payroll needs without any delays.

· Direct deposits. Smaller businesses rarely have the ability to offer employees direct deposit options. Working through a payroll outsourcing company can open up this option.

· Additional Benefits. Because of the way some outsourcing companies contract with small businesses, there may be an opportunity for the businesses to take advantage of group benefits (like health care) that would not otherwise be available or affordable.

· More employee focus. Employees that have been multi-tasking will be able to release the administrative jobs and focus on the items that are covered by their job description or their particular position.

· No more investments in payroll software. Technology is always changing and those changes cost small businesses in the form of upgrades. Using a payroll outsourcing company will eliminate the need to spend the time, energy or money on new software.

Payroll outsourcing can be handled in several different ways and often depends on the business’s budget and needs. No matter which path is taken, by reducing the administrative tasks will give the small business one less item to wear it down.

Once you decide on to out-source your payroll it will be time to choose the right service for your needs. Understanding the different types of payroll companies and how they function will help you choose the one that will work best for your company and for your budget.

Professional Employer Organizations (PEO) - sets up the payroll services by hiring the company’s employees.  The PEO becomes the employer of record and leases back the employees under contract to the original employer.  This is often known as co-employment or employee leasing.  PEO’s operate in all 50 of the United States and in several other countries around the world.

By combining employees of multiple smaller companies under one organization the PEO may be able to qualify for lower premiums on health insurance plans and other benefits that the co-employers can then pass on.

Business Process Outsourcing (BPO) – companies that are designed to handle non-essential day to day business including human resources, document management and even customer service.  Shifting time consuming activities to an outside source offers companies more flexibility within their current organization.

Online Payroll Services – online services offered by outsourcing companies for business looking for the right cost effective payroll alternatives.  Using online services allows a business to save even more when choosing to outsource payroll or other administrative functions.

Traditional payroll systems can be expensive, difficult to run (or require special training) and often take up a great deal of time from the administration.  Many small and medium sized businesses are finding the perfect solution to this problem through outsourcing.

When looking for the right payroll solution a business needs to consider a few factors.

What are the benefits to choosing this outsourcing alternative?  Some companies can provide additional benefits beyond simple administrative functions (like group health insurance).

How much time can be saved with this choice?  Online payroll services may require more hands on activity from the administration than a more aggressive PEO.

What savings will the outsourcing provide?  Hiring a company to do payroll may free up an employee to tackle other activities that might require the hiring of more personnel.  Be sure to factor in the value of additional benefits that the outsourcing company might provide.

What activities will the outsourcing company be responsible for handling?  It can be a better value for the fees if the outsourcing company is responsible for tax papers, payroll, and even payroll analysis.

Small and medium sized business can find a number of benefits with outsourcing some of administrative practices. Payroll can be particularly time consuming. Choosing the right type of company that specializes in the individual needs of the business will help determine the best route for outsourcing.

It is always a sound business practice to compare the benefits of a service or product with the cost that will be required. Choosing a payroll outsourcing company should follow this same premise. The benefits for one business may be different for another but they must outweigh the costs to make the decision good business practice.

Each week Mr. Smith pays an employee $15 per hour for his experience and knowledge with numbers. This employee takes 10 hours to complete all of the paper work required to create payroll for the 20 total employees that work for Mr. Smith. Mr. Smith is spending just under $200 each week (after payroll taxes and other expenses) to keep this one employee.

After searching around Mr. Smith finds that average payroll outsourcing company would charge around $120 for weekly payroll plus an additional $2 per employee. The total costs for payroll would be down to $160 each week giving Mr. Smith a savings of $40 each week (or over $2000 each year).

This scenario is not uncommon. Most experts agree that when small businesses outsource payroll the savings will likely equal 20% or more.

As a small business with only a few employees, Mr. Jones is unable to provide health insurance as a benefit. The cost for individual policies is just too expensive. Even paying just half of the cost, a family health insurance policy could cost as much as $250 each month per employee.

Mr. Jones has been talking with several different payroll outsourcing companies. One particular type of company, known as a PEO, would actually hire his employees, do their payroll and then lease them back to him. Because they have a large number of employees on their books these PEOs are able to offer group health insurance. Mr. Jones would now only have to pay around $170 each month for each employee. This one savings could add up to almost $1000 in savings for each employee.

Group health insurance rates are not only less expensive, but the negotiation power of the larger numbers allows the group to get the best benefits under the policy as well.

Ms. Brown has been saving money by producing the weekly payroll for her business on her own time. She currently employees just 10 full time workers. It usually takes her around 8 hours to complete the payroll each week. Because she is dealing with administrative needs, she has to have someone take her place on the floor of the business. The cost for the replacement is $55 each week.

After being out sick for a couple of days and having to delay payroll, Ms. Brown takes some time to look into payroll outsourcing. The average company she locates charges just $4 per payroll check – or only $40 for Ms. Brown. This comes out to a savings of almost $800 each year.

Not only are their financial benefits to choosing a payroll outsourcing company but there is no risk of delays because of sick employees or a change of employee.

It will not take long to discover that the small business can benefit in a number of different ways by choosing a payroll outsourcing company to handle administrative needs.

There may be a great deal of responsibility with being a CEO of a major corporation Besides being the main figure head that the media and most everyone else looks too, there are quite a few jobs that have to be juggled (not to mention the weight of the company

The key to good business is to know when to do the project yourself and when to delegate the task. Recognizing weaknesses and choosing a different route is a great way to save money even when it requires spending money in the process. Your time is valuable and you have to choose the best way to spend that time.

Payroll processing has been the thorn in many small businesses side. It can be a time consuming process whether it is done using traditional methods or using some of the new software that is available today. Instead of focusing on these time consuming tasks, the small business needs to be in the business of growing.

Finding a quality payroll service will give you the time to focus on the tasks needed to grow your small business to something bigger and better. Many of these outside companies specialize in supporting small businesses by handling the administrative tasks of the traditional work day. They can provide payroll services, marketing campaigns and even offer customer service methods.

The cost of the payroll serve will usually balance out for small businesses. Before the payroll service a small business will spend money on bookkeeping, accounting, and additional office supplies. It is likely that valuable employees are kept from doing their needed jobs to focus on these tasks. Processing payroll taxes eats up around 40 to 60 hours each year. That is almost two weeks worth of actual work. Many experts believe that the cost of outsourcing these services are actually much less.

Switching to a payroll service will open many doors to the small business. Direct deposits will be available to employees. Updates of the computer systems (for payroll purposes) will be eliminated. And a team of specialists will be handling the administration of payroll removing that burden and task.

Instead of focusing on the details required to the payroll for your small business you should focus on growing that small business. Find a payroll service that you fill comfortable with and add two weeks to your productivity (or maybe take a much deserved vacation).

There are some that would tell you that professional sports are out of control when it comes to money. The critics also complain that it is the little guy that ends up paying for all the outrageous paychecks. Here is just some of what they are all talking about.

	1. The New York Yankees have the highest team payroll of any professional sports team in the United States. They pay out a total of $209,081,579 (as of 2008) with the average player making over $6.5 million. It seems like a rather high out put for a team that hasn’t won the World Series title since 2000.
	2. The Detroit Tigers are well below the Yankees in payroll, but the team still shells out about $138,685,197 each year. The average pay is just over $4.5 million. The Tigers have also had a dry streak when it comes to the World Series, but they do have an American League pennant from 2006.
	3. New York is on the list again with the New York Mets. Payroll is only slightly less than the Tigers at a staggering $138,293,378. The average paycheck is also over the $4.5 mark. The Mets have not seen a World Series title in this century.
	4. The Boston Red Sox are the reigning World Series Champs (2007) and only make it to the number 4 position for highest payroll in professional sports. The current team payroll is $133,440,037 with the average paycheck higher than the previous two teams ($4.7 million). Until recently, the Red Sox have struggled to make their mark in the MLB. This season will show if they are back to stay a while.
	5. The Chicago White Sox rounds out the top five professional sports teams with the highest payroll. The last World Series title was in 2005 (one of only 3 for the team) and put an end to a nearly 100 year dry spell. The average paycheck for the White Sox is just under $4.5 million with the total payroll running $121,152,667.
	6. The San Francisco 49ers is next in line making its payroll the highest in the NFL at $120,575,036. The team has a steak of champinoships but the last Super Bowl win was almost 15 years back (1994).
The rest of the top payrolls are paid out by MLB teams.
	7. The Los Angeles Angels of Anaheim pay out $119,216,333 with the average paycheck going out at just over $4 million. The high pay has made some difference with the Angels winning the West Division in 2007 and 2005, but there has only been one World Series title and that was in 2002.
	8. The Chicago Cubs are next in line for highest professional sports team payroll at $118,595,833. The average paycheck is a little higher than the Angels ($4.3 million). The dry streak for the Cubs is one of the worst in the league with the last World Series title coming back at the beginning of last century (1908).
	9. The Los Angeles Dodgers have a current payroll of $118,536,038. The average paycheck is around $4.2 million. There has been some past success for the Dodgers (with 21 National League Pennants to the team’s credit) but the last World Series title was back in 1988.
	10. The Seattle Mariners round out the top ten professional sports teams with the highest payrolls. Although the Mariners are one of the younger teams in MLB it still pays out $117,993,982. The average paycheck is higher than some of the other teams at around $4.5 million. So far the team has little to show for the money with only 3 West Division titles to its credit.

There are stories all over the news of top company officials that are receiving insane paychecks while companies are struggling just to make ends meet. On the other end of the corporate scale are those CEOs that are taking only $1 for a salary (and earning their income based on the company performance).

	Steve Jobs CEO of Apple, Inc Market Cap: 153.30B
	Jeff Katzenberg DreamWorks Animation SKG (DWA) Market Cap: 2.68B
	Richard Kinder Kinder Morgan Market Cap: 3.98B
	Jerry Yang Yahoo, Inc. Market Cap: 31.05B
	Eric Schmidt Google, Inc. Market Cap: 163.84B
	Richard Fairbank Capital One Market Cap: 13.39B
	Rob Glaser RealNetworks Market Cap: 928.81M
	James Rogers Duke Energy Market Cap: 21.75B
	John Mackey Whole Foods Market Market Cap: 2.94B
	Bruce Berman Prepaid Card Holdings, Inc Market Cap: 30.98M
	Bill Ford Ford Motor Company Market Cap: 10.43B (Currently Chairman but took $1 salary as CEO and has carried that over to Chairman)
	Terry Considine Apartment Investment & Management Market Cap: 2.88B

Interesting note - Lee Iacocca took a $1 a year salary in 1978 as chairman of Chrysler (it was an effort to lead by example and encourage the workers to also accept a salary cut).