Teaching ESL

Unemployment tax
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Author:  bennyhanda [ Tue Apr 28, 2015 10:47 am ]
Post subject:  Unemployment tax

Good morning. Just wondering. I have a small school and have recently hired a new teacher who worked for a big English conversation school in Osaka. He is asking about unemployment insurance. I have never taken it out of any teacher's salary, nor do I remember it ever getting taken out of my pay as a teacher. Is this common at the "big" schools? I usually just take out income tax. Thank you.

Author:  mesmark [ Wed Apr 29, 2015 6:34 pm ]
Post subject:  Re: Unemployment tax

According to my information, neither the employee nor the employer pay into the workmen compensation program. It's called 'hitsugyo houken' and it's paid out via tax revenue. So, your employee doesn't need to pay anything for that.

I'm wondering if he is thinking of social security - 'kokumin nenkin'. That, he will have to pay, but he does it through the social security office. The employer doesn't withhold this.

In larger companies, they have 'shakai houken' which is an add-on to 'kokumin nenkin'. Both the employer and the employee contribute to these programs. This is withheld from the employee's salary and contributions are made through the employer. Upon retirement, people receive more in social security payouts than just the basic social security - 'kokumin nenkin'.

Author:  bennyhanda [ Thu Apr 30, 2015 9:35 am ]
Post subject:  Re: Unemployment tax

Good morning. I think I got it and I think that explanation hits it right on the button. He's off to city hall today to straighten all that out. Thanks. As a growing school, had a few students study abroad so I became an agent, also thinking of opening up another school. Any advantages to becoming an LLC?

Author:  mesmark [ Fri May 08, 2015 11:41 am ]
Post subject:  Re: Unemployment tax

The benefit to an LLC is the limited liability. Basically, if the company goes into debt (either by taking out loans or being sued) then that debt may not come back to the president's personal holdings. When you are self employed or just a small, unregistered business, the financial liabilities are personal. Generally, small English schools don't carry much debt and it may make little to no difference.

Some of the benefits come with control of your salary, debt and income. With a company you can roll over debt from previous years to cover income in subsequent years. Thus avoiding paying tax on that excess income. Management of that is tricky. You basically always want to be in the red (on paper.) Build up your debt and then use that against a year in the black.

If you are an American, you might want to check with an accountant. I believe you open yourself up to additional tax filings if you also own a business. You will need to file personal income tax and business income tax with the IRS. Now, if the company owner is a non-US citizen, the business tax portion doesn't need to be filled with the US.

Author:  bennyhanda [ Thu May 21, 2015 6:16 pm ]
Post subject:  Re: Unemployment tax

I get it. Thanks a lot.

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