Better Tomorrow Financial named best Seattle Financial Advisor for 2022

Legaldirectorate.com, an AI-powered ranker of professional services, ranked us #1 among Seattle-area financial advisors for 2022 out of 234 King County advisory services! (I owe this to my clients for their stellar reviews.)

Contact us to see why and let us transform your financial life.

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Seattle Financial Advisors

A man walks into town looking for a job

A scruffy character rolls into town needing some money badly, and out of pity and a bit of self-interest the shopkeeper in question hires him for the day to sweep the storefront or wash some dishes. He pays him in cash so he can get something to eat, and the drifter moves on.

You’ve seen it in old movies– maybe set in an inner city in the grips of the Great Depression, or the Dust Bowl: the romantic notion of hiring someone on the spur of the moment for a day’s work. Maybe you even keep him around for a while ’cause you like the guy (or gal.)

“‘ello Guv’nah!”

Such a transaction today would look a little different:

  1. You meet the drifter, assess his pennilessness and strong back, and offer him a job sweeping your store front for $20. (You’ve already checked the Washington state, Federal, and city of Seattle minimum wage laws and confirmed this salary is appropriate.) He accepts.
  2. You’d both like him to get started sweeping right away, but before you lend him the broom you ask him to take a seat while you print off a W-4 form to withhold his Federal payroll taxes, and an I-9 form to prove that he’s legally allowed to work for you. You need his passport or two other forms of government-issued, identity-proving documentation. Fortunately, he happens to have his passport in his dirty cotton knapsack.
  3. He signs the forms, and asks for the broom, but you remember that you’ve never hired an employee before, so you need to do a few things first. You offer him a cup of coffee while you fire up your laptop to login into the IRS site to get an EIN, and then you register on the EFTPS to pay his payroll taxes later.
  4. You live in Washington state, so you pour him another cup of coffee while you log into your SAW account to register for unemployment insurance as well as worker’s compensation. (He would definitely NOT qualify as an independent contractor since you’re dictating and overseeing his sweeping work.) You pay the $19 for the worker’s comp registration fee, ruefully realizing that’s equivalent to the hour of wages you intended to pay him for.
  5. You remember that Washington state also requires paid family medical leave and long-term care insurance, so you sign up for those programs as well. You ask him first if he’s happened to file for a Washington state LTC exemption, but he just looks at you blankly, so you figure you better withhold the 0.58% taxes…
  6. You dutifully report your new hire to the Washington Division of Child Support so that they can check if he’s behind on his child support.
  7. You realize all these applications are going to take a while to process , so you ask your would-be sweeper to come back in 2 weeks for that porch-cleaning job. He looks puzzled, then shrugs his shoulders and wanders off. You curse the gods legislature for not exempting the 54% of US small business that have fewer than 5 employees from at least SOME of these payroll taxes since they only employ 5% of the US workforce…
  8. Since you have time to kill now before his start date, you research three different websites to print off and put up all the required Federal and State labor posters where your drifter can see them. You note that despite answering ‘no’ to most of the ~20-odd Federal questions, you still have to put up posters pertaining to The Employee Polygraph Protection Act (EPPA), The Fair Labor Standards Act (FLSA), The Occupational Safety and Health (OSH) Act, Uniformed Services Employment and Reemployment Rights Act (USERRA), and Whistleblower Protections. For Washington state, you put up the four required L&I posters (‘Your Rights as a Worker’ and so forth), and the six required Employment Security Department posters about domestic violence (you scratch your head at that one since you’re not married to the drifter), PFML, and unemployment benefits. (Well, three posters really, but these must be in both English and Spanish, even though you’re pretty sure the drifter was speaking fluent English…) You find the links to the PDFs, fire up the printer–praying that you have enough ink in there–, run off fourteen different posters, and tack them up in a place where your customers won’t notice but that no labor department will fine you for not being visible enough.
  9. Two weeks later your applications have been processed. Your worker’s comp rate has been determined, and your sweeper hasn’t left town. You spot him loafing in front of Doc Erbswurst’s Dry Goods Emporium and wave him over, proudly offering him the broom. He accepts it gladly, and starts sweeping. You come back in an hour to a spotless storefront, and proffer an Andrew Jackson for his trouble. He’s about to grab it, when you realize you need to withhold payroll taxes first. You apologize, stuff the bill back into your pocket, and offer him a seat and yet another cup of coffee while you fire up the laptop again.
  10. You calculate the 15.3% in Federal payroll taxes, the 0.58% Washington LTC tax, Washington PFML (0.6%), the ~1% Worker’s Comp rate, and Federal unemployment of 0.6%. You query a bewildering table with 40 different lines of Washington state unemployment rates and figure yours is 1.3%. These add up to 19%, and just as you’re about to remove only $3.80 from his paycheck, you remember to withhold Federal income taxes. You consult the tramp’s W-4 to see whether he has a working spouse or other employment (he doesn’t) and determine that you need to withhold another 10%. You remove $2 more.
  11. You’re about to hand him the $14.20, but remember that you need to keep careful records of timesheets and wages for four year. You ask him to first fill out his hours on a slip of paper. He does so. You put the cash in his hand– he didn’t fill out a direct deposit authorization form– and before he gets too irate about the ‘missing’ $5.80, you remind him that he’s earned 1/75th of a social security credit thanks to your scrupulous withholding, and that he should file for the Earned Income Tax Credit to get some of the rest back.
  12. He slouches away mumbling “and they say the bottom 47% pay no taxes!” You busy yourself with sending ACH payments from your bank account to all of the various payroll tax agencies before you forget. You make a note to get the tramp’s forwarding address before he leaves town so that you can send him a W-2 at the end of the year for his income taxes, and to file a copy of the same along with a W-3 to the IRS before next January 31st.
  13. You record the $20 in expenses on your accounting spreadsheet to remember to deduct it from your income taxes come April. You pray that your drifter doesn’t sue you later for a hostile work environment (a customer made an off-color remark while coming into the store), sexual harassment (you were admiring his strong back), or discrimination (was he a member of a ‘protected class’?) Perhaps he’ll settle for simply roasting you on social media…
  14. You smile ruefully and make one more mental note: never, EVER hire an employee again!

How to hire your first employee and do payroll in Washington state

If you’ve started your small business and are now considering hiring your first employee, prepare to go through some massive headache even for hiring a single employee for part-time work, and even if it’s your own spouse or family member. We’ll assume you’ve already set up your business structure through your state, but if you haven’t, read this guide first.

Get set up to pay Federal and WA State employment-related taxes

Get an EIN from the IRS.

Then register at the Electronic Federal Tax Payment System. You can authorize your bank info directly like I did with my free novo.co business bank account, which I recommend.

When you submit your enrollment, you’ll get a PIN by snail mail (*facepalm*) later to login:

While you’re waiting for the Federal government’s tax collection machinery to grind into action, you can then also

Employee forms

First, have your employee fill out and sign a W-4 form for withholding of Federal taxes. Retain this form and use it to compute their income tax withholding later.

They also need to fill out and sign an I-9 form declaring them eligible to work in the US.

Washington state payroll taxes

If you haven’t already, create a SecureAccess Washington account.

Washington state unemployment taxes

Then add EAMS (Employer Account Management System) to your list of SAW services in order to pay unemployment taxes (not necessary as of May 2022 if you’re only employing your spouse.) Click ‘Add Service’ then browse services by name, then add EAMS:

You can then use EAMS to do all this stuff:

Washington state PFML payroll taxes

While you’re logged into SAW, also add Paid Family and Medical Leave (PFML) to pay those payroll taxes. After you add that service, click ‘Access Now’ and ‘Register your Business’ with your UBI number that you got from the state.

When I did this, for some annoying reason I had to ‘Create Employer’ since my UBI wasn’t immediately recognized. I then had to upload my Business License that I received from the state when I created my LLC. Perhaps the DOR and SAW system aren’t linked very well…

Washington state Worker’s Comp

You will probably also need to get a Workers’ Compensation Account (WCA) and purchase Worker’s Comp insurance through the state fund (you can’t buy it privately, and self-insuring requires at least $25 million on hand…)

If you already have a business license, renew it to indicate that you’re going to hire employees. There are a few exceptions listed here (and in state law here.)

One exception is if you’re a sole proprietor and you’re hiring your spouse, then your spouse would be exempt. Note that this truly means your biz structure is ‘Sole Proprietor’. I was hoping this would apply to me since I’m an LLC operating/taxed as a sole prop, but nope, that would make too much logical sense and I had to enroll my wife in WA Worker’s Comp to do the hazardous work of part-time data entry…

Worker’s comp required for contractors you hire?

Washington state also tries to scare you into believing you need Worker’s Comp for independent contractors, which, if they are truly independent contractors, you do NOT. You can read WA’s guide here to make that determination, or watch this LNI training.

Sign up for Worker’s Comp

Login at the DOR site, then click ‘Renew your business license’ to update it, assuming you did NOT previously say you were going to hire employees:

Then scroll down and click ‘Hire…’

Uncheck the evil ‘Add optional coverage for owners’ default…:

You’ll need your Federal EIN as well. Leave the ‘optional’ coverages as ‘No’ unless you wanna add even more headaches and cost to your life…:

Assuming you aren’t hiring any minors, switch this dumb default to ‘No’ as well:

The BLS will then charge you at least $19 just because, so have your business bank account ready, and then be prepared to wait up to 2 weeks for them to get back to you on what you’ll have to do next to set up and pay Worker’s Comp.

Pay your Federal payroll taxes to the IRS

Now that you’re registered with EFTPS, you can calculate and pay your Federal payroll taxes for Social Security and Medicare (FICA.) Currently the rates are 6.2% for social security and 1.45% for Medicare up to the social security wage ceiling of ~$140,000 (in 2022.) Note that both you–the employer– AND the employee each pay this amount, so the true tax is double this. You withhold the employee’s half from their pay and you pay the other half.

Pay your Washington state payroll taxes

Pay your Worker’s Comp, PFML (Paid Family Leave and Washington Cares (LTC)), Washington unemployment, Federal unemployement (FUTA) after recording them for all hours worked in a given pay period (no more than monthly.)

End of year

By Jan 31st for the previous years’ employee wages– follow this link for the official guidelines– give your employee(s) their W-2s for them to do their own income taxes. You also need to file copies of the W-2s and a W-3 with the IRS.

The Social Security Administration has a free online tool for generating and filing W-2s (one W-2 per employee) and your W-3. Go to this site to learn more. Then go to Business Services Online, log in to or register for an account, and follow the steps to create your W-2s and W-3, and file them.

You will need your employees’ Social Security Numbers (SSN), payroll information, and more. You can get the SSN from the W-4s. Get the payroll information (how much you paid, how much social security tax you paid, etc) from the spreadsheets or whatever you used to manage employee payroll.

Washington state excise (B&O) taxes on gross revenue

File your Washington state B&O taxes if you grossed more than ~$35,000 in revenue (NOT profits!) by April 15th for the previous years’ income.

File your business Federal income taxes

File your Federal business income taxes using the tax software of your choice– or hire an accountant– by April 15th for the previous years’ income. If you’re a sole prop or operating an LLC as a sole prop, just file your personal taxes and add your business income.

How to buy savings bonds through Treasury Direct to take advantage of the current 9.62% yield on I bonds

The internet is abuzz with the fact that I bonds– which are savings bonds available from the US Treasury’s treasurydirect.gov site– are yielding 9.62% from May 2022 – Oct 2022. Since this is the variable, inflation-based yield part of inflation-adjusted I bonds, this is subject to change every 6 months, but is still a great deal vs what’s out there today for yields.

Yes, this is really the official US Treasury’s website, apparently created in 1996…

If you’d like to go through the small hassle (~30 minutes or less!) of creating a Treasury Direct account, you can open an account today and buy up to the maximum of $10,000 per person– or per entity, such as a business or trust– per year of I bonds to pick up at least a couple hundred bucks of interest above what you can get in other fixed investment today.

Important things to know about savings bonds

  • You MUST hold I bonds for at least 1 year, so this should be money you absolutely don’t need for at least a year.
  • The variable part of the I bond interest rate– which is based on inflation– can change every 6 months, but the fixed rate (currently 0%) will remain the same for the 30-year life of the bond.
  • If you sell your I bonds within 5 years of purchase, you forfeit the last 3 months of interest.
  • As long as you have a social security number, US citizens, residents, and civilian employees can all buy I bonds.

What will your actual yield be?

To conservatively estimate your 1 year yield, assume 9.62% for 6 months and maybe 2% for the next 6 months (a pessimistic assumption, but in line with inflation estimates) = average of 5.8%, then multiply by 3/4 to remove 3 months’ of interest = 4.4%. This is likely the worst-case scenario for what you’ll make over 1 year.

Currently, 1 year treasury rates are 2%, so you’re getting at least a 2.4% bump over an equivalent ‘risk-free’ (since it’s backed by the US guv’ment) investment. This means if you max out at $10 K, you’re picking up an extra $240 for your trouble. Not life-changing, but likely well-worth it from an hourly wage perspective! If you can do it for yourself and, say, your spouse or child, that’s all the better.

Open a Treasury Direct account

Go here and open an account. Leave ‘Individual’ checked if this is for yourself. If you’re creating an account for your minor child, you need to first create & login to your own account, and then follow this guide.

The $10 K annual limit of I bonds is per recipient, so gifting $10 K to your minor child(ren) is totally allowed, but keep in mind that it truly must be a gift– used for the benefit of your minor child; no take-backsies– and counts towards the annual gift limit for them ($16,000 per giver + recipient combo in 2022. Couples can give 2x the individual limit since each person can give $16 K apiece.)

When you finish registering and setting a password and connecting your bank account, you’ll get an account number sent to your email to login with as your username. Make sure to remember/jot down your password since you have to use a mouse to enter it, and therefore can’t use a password-remembering tool…

Buy your bonds

Click ‘BuyDirect’ and choose the series of bonds you’d like (Series I for I bonds), and follow the prompts. Your trade should be executed the next business day.

So there you go! Create an account today and buy the limit IF you don’t need the money for 1 year and have already maxed out your tax-advantaged sources of savings like your 401k, Roth IRA, HSA, etc.

Add a beneficiary (or second owner)

I recommend you also add a beneficiary to your account. Follow these instructions: Click ‘ManageDirect’, ‘Add a Registration’, then check ‘Beneficiary’ (if you’re adding a beneficiary), fill out YOUR info in the ‘First-Named Registrant’ section, and then your beneficiary’s (or secondary owner’s) info in the next section. Check ‘Make this my preferred registration’ at the bottom before you hit ‘Submit’.

Does this sound hard? Considering engaging a trustworthy financial advisor, me.