Listen in to one of our recent radio commercials talking about how JS Services can reduce your payroll pains.

Listen to these two talk about it! Using JS Services takes your mind off taxes and lets you focus on the real game of business.

Jack Schneider never dreamed of becoming a paper-pusher. The Brooklyn native studied psychology in college before starting his professional life in the cockpit of a US Air Force trainer jet called “the dog whistle.”

He keeps a model of the noisy aircraft on a shelf behind his desk, tucked among replicas of the other planes he flew during his twelve- year military career that spanned two tours in Vietnam and ended at Hickam AFB in 1975. Flying, he says, was his boyhood dream.

Handling payroll and negotiating with health care companies didn’t factor into the fantasy, but the Honolulu business leader has built a second career doing just that. He estab- lished employee-leasing firm JS Services in 1982, earning a reputation as a man who can wrangle a payroll document.

“I’m like a pendulum,” he says, “swinging from shrink to fighter pilot to payroll.”

JS Services was not Jack’s first business endeavor. He ran a series of companies, among them a wholesale import business called South Seas Specialties. Jack barely remembers the South Seas product roster, which included “scenic things, acrylic carvings, key chains,” he says. His memory is clear, though, when he recounts the year of red tape following the dis- covery that the company had misclassified one of its salesmen as an independent contractor. Or when he recalls the times that processing payroll and figuring taxes distracted him from growing the business. “I really disliked it with a passion,” he says.

When he left the company, he looked for a new way to apply his growing business acumen. “I started a company doing what I as a business owner did not like to do,” he says.

JS Services specializes in managing the payroll functions that can swallow whole days on an entrepreneur’s calendar. The firm partners with small- to medium-size businesses, transferring workers onto its own payroll and then leasing those workers back to its client companies. The upshot: For a percentage of total payroll, Jack pulls liability for everything from employee taxes to benefits administra- tion and workers’ compensation off of his clients’ desks.

When Jack launched the company, he faced a tough market. The employee-leasing business model in Hawaii had just been approved. “People were surprised that the company concept is legal,” Jack says. “It was a long education process, but the business grew by word of mouth and networking.” His client list includes companies offering everything from legal representation to extermination services.

During the last tax season, Jack and his five-member team processed federal wage and tax statements for 2,700 Hawai‘i workers. The heap of W-2s represents more than compliance; the work supports the kind of thriving business climate that Jack wants to foster. “Employers can focus on what they went into business to do,” he says. “Payroll is nonpro- ductive. It’s a waste of time for everyone involved—except for me.”

The complexities of the niche help drive demand for the company’s services, Jack says. Medical plan costs have risen along with unemployment taxes. Forms change annually, making it a yearly challenge for business owners to manage all of the components. “It’s a dynamic thing,” Jack says.

The recession has had an impact on JS Ser- vices. Despite an increase in both the number of clients and the number of employees served, total payroll dollars have been decreasing, Jack says. It’s a window into the state of small- and mid-size businesses in the sagging economy. “There is no recovery here yet,” he says. Reduced payroll means that JS Services revenues aren’t growing. “We’re working harder but making less money,” Jack says. Nevertheless, he made the decision to reduce fees last year to help struggling clients.

In addition to leading a company that’s poised to celebrate its thirtieth anniversary, Jack works with organizations that foster small business growth. He advises entrepreneurs to join networking groups. “People are more than happy to share,” he says, “especially if they’re in a different industry. You’re not a threat, and the same business practices apply.”

Jack sits on the board of Smart Business Hawaii and is the immediate past president of the International Executives Association.

He still finds time to get up in the air, renting private airplanes at Honolulu Inter- national Airport. But Jack doesn’t regret his current career path. “If I didn’t enjoy it, I wouldn’t be doing it,” he says.

Best Use Of Leftovers:

Liberty House carried Jack’s Tiki Soap-on-a-Rope product in the late 1970s, but the sandalwood-scented bars never sold. Jack claims to have bathed with the Keaka Nui-branded soaps until five years ago. “It was cheaper than storage.”

Biggest ‘Designers’ Challenge’:

The popular Home & Garden Television show featured the Wai‘alae Iki home where Jack and wife Michelle live with their 19-year-old parrot. The bird’s chatter repeatedly interrupted taping—until Jack let him perch on his shoulder and share the spotlight.

Most Outdated Technology:

JS Services still has the same Apple II+ computers Jack used at South Seas Specialties. “We don’t use them anymore,” he promises. The company invests in custom software that no longer arrives in the mail on a floppy disk.

Most Unexpected Use Of Military Training:

Jack executed a parachute roll to control a recent fall on the stairs of a Kapolei golf course. He attributes the reflex to the same Air Force experience that taught him to manage employees and perform under pressure.

Best Advice For New Business Owners:

“Don’t hire anybody,” Jack says. “Do it all yourself. And when you get to the point that you can’t handle it alone anymore, hire someone to handle the red tape.”

Answer:

You should always consult your CPA or tax advisor first, but I can tell you that by putting yourself on payroll, you will be required to obtain work comp and TDI policies and periodically pay premiums for them.

In addition, you’ll also have to perform the periodic audits required by the insurance carriers. Your work comp carrier may exclude work comp payments, and you will probably be unable to collect if you are injured on the job. State unemployment tax will have to be paid and a UC-B6 form will have to be filed quarterly. Federal unemployment tax payments will have to be paid quarterly, and an annual 940 Form will also be required. You will need to file the state withholding tax form HW-3 and the federal 941 payroll tax forms. Oh yes, and don’t forget the annual W-2 forms! In short, adding yourself to the payroll means added paperwork. If you decide to do it, find an HR specialist who can help you with the details.

A lot of my larger competitors won’t take companies with 1-2 employees but we take them gladly, for a few reasons. First, these are the people that need our help the most and second, small companies grow and we want to be able to grow with them. We want to allow them to grow and prosper and we become part of that prosperity.

Basically, for full time workers, my markup is anywhere between 4 and 8 percent of the gross payroll. This cost can be, and usually is offset by the administrative costs that the client would have to pay to do it themselves or to hire a CPA, for instance, to do it. It could also be offset by lower insurance premiums: work comp, health or both. In that effect he could be saving money by using me, at the very worst he’ll break even.

The main reasons I would say to use JS services for employee leasing are: First, you can save time and probably money. Second, eliminate all “hassles”; don’t deal with government taxes or insurance companies anymore, JS services will take care of it all. And third, concentrate on what you do best, your business, JS services will take care of the rest.

Yes, when we hire minors, there are certain things we must get from the state as far as approval for the minor to work. We also do green- card holders, there are also some immigration rules we must become familiar with. Those rules have been changing too, we keep on top of it and a small employer wouldn’t know about the changing rules.

If you weren’t a client of mine, what would you have to do as an employer? Many things, payroll and tax deposits must be in on time. And that is a function of how much your payroll is, if you are a large employer you have to do it weekly. If you are a small employer, you might have a little more time to it. And, an employer must get comp insurance. This usually requires a pre-payment, but if you use JS services, pay as you go. An employer must also get a TDI policy, health insurance coverage, as well as create an employer handbook for your employees to follow by. And as an employer, you must monthly file your work comp audit, depending on your size. Here’s the checklist for a smaller company: quarterly you must file a payroll tax form, quarterly at a minimum work comp insurance audit & payment, a quarterly TDI insurance audit & payment, a quarterly state unemployment tax filing, federal unemployment tax must be paid quarterly, health insurance report of who are your employees monthly, as well as W2’s and many other regulations. The state changed the 941 form for this year. A small employer wouldn’t be able to keep up with the changes. One trap many employers fall into is forgetting to pay their taxes on time. Few weeks into the next quarter, IRS sends a notice with the penalty and interest of not paying the tax. This cascades and adds up with penalties and interests and many letters from the IRS. Many people go into a panic and pay it off, but if an employer knew what they were doing they would call the IRS and explain what happened. Letters from the IRS is what puts most people into a panic. If an employer went with JS services, JS services gets all the letters from the IRS and the employer doesn’t need to panic.

There is a certain fixed schedule of benefits that the state and the fed’s mandate: the FICA tax, Medicare tax, state & federal unemployment tax, work comp, and TDI. The employer pays it all. Add all these numbers together and add my percentage to it, the only other variable is the work comp based on what you do. The risk exposure is in there, too. Depending on the size of the client, onesy or twosy as far as numbers of employees, we charge them a little higher percentage than we will for the client with one hundred sixty employees. Only because the labor involved in doing the payroll for one or two is much more labor intensive than it is for doing a large company.