Local business owner Colleen MacLeod is a career entrepreneur well-acquainted with government taxes, fees and regulations. MacLeod says itís wise to hire a bookkeeper to keep up with it all. CHRIS BAXTER/The Observer
by BILL RAUTENSTRAUCH / The Observer
Taxes, fees, regulations and bill-paying test mettle of small business owners
Never underestimate the amount of hard work that goes into starting and running a business — and never forget the need to keep the government happy.
Colleen MacLeod knows those principles well. She fits the profile of a serial entrepreneur, having owned and operated at least four small businesses in the La Grande area over the last 20 to 30 years.
The former county commissioner and her husband, Al, currently own Joe Beans Coffee, a restaurant in downtown La Grande selling fresh-roasted coffee beans and brew, sandwiches, pastries and more. She said she and her husband love their self-created jobs, but added that anyone thinking about starting a business should carefully consider the challenges and the level of commitment needed.
“It’s like they say, when you own a business you get to work half days. It’s up to you to choose which 12 hours of the day you’d like to work,” she said.
Beyond using hard-won skill and expertise to provide a product or a service, business people have the challenge of paying the bills. And within that challenge, there’s a sub-challenge: staying up with local, state and federal taxes and fees.
MacLeod said she doesn’t even try to keep track of them by herself. It’s too risky.
“I actually have a bookkeeper to do my books. It’s complicated, and if you screw up, they fine you,” she said.
At the state level, business owners who employ people can figure on shelling out a hefty sum to the state and federal governments for payroll taxes. MacLeod said that for her single part-time employee, she pays between $400 and $500 a quarter. She also pays out about $400 a year for unemployment insurance.
And there’s more. On the federal level, businesses are required to pay money under the Federal Unemployment Tax Act. The bad news is, the federal rate is 6.2 percent on the first $7,000 of an employee’s wages. The good news? There’s a tax credit available for employers who pay all their state unemployment taxes and file all their reports on time. The maximum allowable credit is 5.4 percent, resulting in a net payable FUTA tax rate of .8 percent.
In addition to the payroll taxes, some businesses in Union County also are subject to a local business personal property tax. County Assessor Linda Hill said the tax applies to things like fixtures, equipment, furniture and shelving, but not to inventory. Neither does it apply to farm equipment.
Hill said there is a threshold that protects smaller businesses from having to pay the local tax. Last year, businesses with personal property assessed at under $15,500 are not taxed.
“It really is going to depend on the type of business we’re talking about,” Hill said. She added that depreciation of the personal property is taken into account.
Hill said the county keeps a database of businesses, and sends personal business property tax forms Dec. 31, with returns due by March 1. She said anyone who has not received a form or has questions should call her office.
Yet another government-related cost of doing business is the state’s fee for an assumed name. In Oregon, the name must be registered with the Secretary of State’s corporate division, the charge $50 every two years. MacLeod pays faithfully, but said she wonders why the state requires people to renew and pay again and again.
Once, she said, is sufficient.
“It’s one of those nonsensical things. I suspect they never even look at the form after you fill it out,” she said.
Most of the businesses the MacLeods have owned over the years have been related to food service. They’ve operated a lunch catering truck, the Highway 30 Coffee Co. and Joe and Sugar’s restaurants downtown, and Joe Beans.
Restaurant license fees pay for state inspections, and MacLeod said she understands the necessity of that. But she also said she wonders why the state doesn’t offer some incentive to restaurants that consistently score high on their inspections.
“We rarely get less than 97 out of 100 possible points,” she said. “What puzzles me is, why isn’t there a reward system?”
The restaurant license fee is determined by the number of seats in the establishment. For the MacLeods, the charge is $500 a year. They also pay extra if they decide to set up a vendor’s booth at a community event. As one example, MacLeod said she had to pay the state $60 for an inspection of her concession at the annual Celtic Festival in La Grande.
MacLeod said government regulation costs her more money indirectly. For one thing, Oregon’s minimum wage goes periodically up with inflation, and is the second highest in the country. MacLeod said she thinks a hike in the minimum wage does the economy more harm than good.
“Every time they jack that up, everything goes up,” she said.
Another indirect cost is the fee for the bookkeeper, the person who keeps the business right with government. MacLeod said that between the end of last year through Jan. 16 of this year, she’s paid her bookkeeper more than $300.
MacLeod said she shows up at work at 6 a.m., stays until 4 p.m. or after. Her husband comes in around 8 a.m., stays through closing and does the clean-up at the end of the business day. At home, he puts in even more hours roasting coffee.
MacLeod said she and her husband aren’t getting rich running their coffee shop and eating emporium — the cost of health insurance keeps getting in the way — but they enjoy being in business too much to quit. Mostly, they like dealing with the public, and being independent.
“I love it. You control the horizontal and you control the vertical,” MacLeod said.
One the other hand, she wishes government was a little more friendly to small business. She said taxes and fees that seem reasonable at first have a way of creeping upward.
“Business becomes the cash cow,” MacLeod said.