Peter runs his own bricklaying business and is considering hiring a full time worker. He will...

Peter runs his own bricklaying business and is considering hiring a full time worker. He will pay his employee a gross wage of $48,500 p.a. His employee is also entitled to 4 weeks paid annual leave and 10 public holidays (2 weeks total). He knows that he has to pay PAYG withholding tax out of the gross wage figure (calculation not required), and has been advised that he has to pay 1.85% in WorkSafe insurance.

a. If this will be Peter’s only employee, does he have to pay payroll tax?

b. Are there any other costs Peter needs to factor in? List and briefly explain.

c. Calculate (showing workings) the full cost to Peter of hiring the above worker.

d. If Peter gives his worker the work vehicle and allows him to use it for personal travel, does this get taxed as well? If so, who pays the tax? (2.5 marks)

Expert Solution

a) Yes

b)payroll taxes are taxes paid on the wages and salaries of employees. These taxes are used to finance social insurance programs, such as Social Security and Medicare. ... The largest of these social insurance taxes are the two federal payroll taxes, which show up as FICA and MEDFICA on your pay stub.

In addition to salaries and wages, the employer will incur some or all of the following payroll-related expenses:

Employer portion of Social Security tax
Employer portion of Medicare tax
State unemployment tax
Federal unemployment tax
Worker compensation insurance
Employer portion of insurance (health, dental, vision, life, disability)
Employer paid holidays, vacations, and sick days
Employer contributions toward 401(k), savings plans, & profit-sharing plans
Employer contributions to pension plans
Post-retirement health insurance

c) Total cost:

48500+1.85%= $49397.25

d)The portion of personal travel on pro-rata basis would be disallowed and also can be said will be taxed.

Regards,

Sushma

ekkarill92 answered 2 days ago

Adam runs his own marketing business in Australia. During the year he incurred the following expenses:...

Adam runs his own marketing business in Australia. During the year he incurred the following expenses: a) salary costs of $500,000. b) salary costs of $9,000 for his son who did some graphic design work for him as he was studying graphic design at university. The work took approximately 19 hours to complete. c) $1200 on membership to the local bowls club where he entertains clients. d) $3,000 on smart clothing that he considered necessary to portray the correct image...

Otto’s brotherDent runs an auto repair business. In his spare time, he calculated his total cost function.

Otto’s brotherDent runs an auto repair business. In his spare time, he calculated his total cost function. He found that the total cost of repairing cars is:TC = 2s2+ 10where sis the number of cars repaired. Write down equations for Dent’s:i) total fixed cost.ii) total variable cost.iii) average variable cost.iv) average fixed cost.v) average total cost.vi) marginal cost functions.

Suppose that a firm is considering hiring a worker and providing the worker with general training....

Suppose that a firm is considering hiring a worker and providing the worker with general training. The workers MPL is $100 during the training period, but rises to $200 in the post-training period. The workers wage is $100 during the training period, the cost of training is $50 and the discount rate is 10 percent. What is the most that a profit-maximizing firm can afford to pay the worker in the second period?

Tom O'Neal always wanted to own his own business. When he was in high school, he...

Tom O'Neal always wanted to own his own business. When he was in high school, he worked evenings and most weekends at a neighborhood bicycle shop. When Tom went to college at the nearby State University, he still came home in the summers and worked at the bike shop. Upon graduation from college, with his accounting degree in hand, the sole proprietor (Steven Judson) of the bike shop invited Tom to become a full partner in the bike shop. Steven...

Gary Reynolds is a sole trader and runs his own business as an architect. Gary tried...

Gary Reynolds is a sole trader and runs his own business as an architect. Gary tried to expand the business 12 months ago by borrowing $100,000 from Rap Bank, employing two assistant architects and setting up a new office on Mitchell Street, Darwin. Gary now finds that his operational costs and debts are much higher than the revenue coming in from the architecture services he provides. A number of creditors are now pressing Gary for payment, including the landlord who...

Rayan is a resident of Musta. He is a full-time employee in a coffee shop. His...

Rayan is a resident of Musta. He is a full-time employee in a coffee shop. His job duty is making coffee and serving the need of clients He is paid $10 per hour. After he finishes his coffee attendant job he travels to the Best Eastern Mall located 40 min away from the coffee shop where he works a second job in a clothing store for another $10/hour. He works 16 hours a day (leaves home at 6 am and...

"Business Expenditures and Deductions" Avery has always wanted to own his own business. Last year, he...

"Business Expenditures and Deductions" Avery has always wanted to own his own business. Last year, he took the leap and opened a pet store in a nearby city. He leases the store. He incurred start-up costs and large inventory costs for buying food in bulk. He had to purchase three large tables and a machine that moves the food to higher shelves for storage. He even hired five people: a groomer, two clerks, a stock person, and a bookkeeper. Unfortunately,...

Lewis is a professional graphic artist with his own business in Sydney. He conducts his activities...

Lewis is a professional graphic artist with his own business in Sydney. He conducts his activities as a sole trader. He employs a receptionist by the name of Mary and an assistant named Jennifer, who is his mother. He received fees from many private clients during the year. Some clients paid in cash after the consultation and some paid later after receiving a bill in the mail. Lewis received the following amounts of cash during the year ended 30 June...

Maurice White is an entrepreneur. He owns his own business. He creates video games using the...

Maurice White is an entrepreneur. He owns his own business. He creates video games using the pictures of his customers as the video game characters. Bobby Brown bought 100 custom built video games from Maurice. To pay for the video games, Bobby issued a note, payable to Maurice. The note states in pertinent part that “I, Bobby Brown, agree that I owe to Maurice White for custom video games, 75,000 dollars to be paid in 10 equal payments of 7,500...

A Case of Growing Pains When he first opened his own business, Dionysus loved it. He...

A Case of Growing Pains When he first opened his own business, Dionysus loved it. He went to work early in the morning and did not leave until after 9.00P.M. To spend time with his family, he would take off a few hours in the afternoon and then return to the store after supper, staying until closing time. When he was away from the store in the late afternoon, part-time personnel handled the operation. That was five years ago. Since...

Question