If you are a small business employer (500 or fewer employees) in the city of Seattle, you should note that starting January 1st 2016, the minimum compensation rate will increase to $12.00/hour or $10.50 minimum wage assuming the balance to get to $12.00 will be made up with employee tips reported to the IRS and/or payments toward an employee's medical benefits plan.
Small employers pay hourly minimum compensation rate based on the following schedule:
|2015 (April 1)||$11.00/hour|
|2016 (January 1)||$12.00/hour|
|2017 (January 1)||$13.00/hour|
|2018 (January 1)||$14.00/hour|
|2019 (January 1)||$15.00/hour|
Small employers pay an hourly minimum wage and reach the minimum compensation rate through employee tips reported to the IRS and/or payments toward an employee’s medical benefits plan. If the tips and/or payments toward medical benefits do not add-up to the minimum compensation rate, the small employer makes up the difference.
|Minimum Compensation||Minimum Wage|
|2015 (April 1)||$11.00/hour||$10.00/hour|
|2016 (January 1)||$12.00/hour||$10.50/hour|
|2017 (January 1)||$13.00/hour||$11.00/hour|
|2018 (January 1)||$14.00/hour||$11.50/hour|
|2019 (January 1)||$15.00/hour||$12.00/hour|
In 2025, small employers will pay the same minimum wage rate as large employers and will no longer count employee tips and/or payments toward an employee’s medical benefit plan toward minimum compensation. The City of Seattle will calculate percentage changes to the minimum wage based on the Consumer Price Index (CPI).
Café 123 is a restaurant with 25 employees. It does not pay toward employee medical benefits. Servers earn tips; kitchen employees do not earn tips.
Starting January 2016, Café 123 will pay a minimum compensation of $12.00/hour.
To meet this requirement:
Café 123 will pay kitchen employees $12.00/hour.
If servers report at least $1.50/hour in tips to the IRS in a pay period, Café 123 will pay them $10.50/hour for a total minimum compensation of $12.00/hour.
If servers average less than $1.50/hour in tips in a pay period, Café 123 must pay the difference. For example, if a server averages $.75/hour in tips in a pay period, Café 123 will pay the difference of $.75/hour. The server will receive a total wage of $11.25/hour and a total minimum compensation of $12.00/hour.
Tax season creates additional stress on top of trying to run your business and keeping it afloat. Outsourced accounting services are always the best option for a small business as it allows experts to handle this maze of tax laws without you having to pay a full-time tax accountant.
There are many benefits to outsourcing the accounting processes for your business. From being able to spend more time on the goals of your company, to averting costly mistakes, having a team of experts on your side helps your business grow. They can also help reduce instances of fraud.
It’s hard to believe that we are already into July. Even with the deadline for filing your return and making a payment (if you owe) being extended to July 15, 2020, it still seemed like it came upon us fast. With only a few weeks left, be sure to get any final documents to us and answer any outstanding communications immediately.