One of the most important parts of payroll processing is properly classifying
workers. Unfortunately, this can also be one of the trickiest parts. When you
know a few simple rules, however, it’s really not all that difficult.
To begin with, it’s important to understand who actually
counts as an “employee” for payroll purposes. An employee is someone who
continually works with the employer in the workplace he or she has provided and
who could be terminated if the employer decides to do so. All workers who meet
these criteria must have taxes withheld.
Other possible classifications include independent
contractors and statutory employees. The classification given to each worker
really determines how he or she should be treated for payroll purposes.
Figuring out which category each and every person you work
with falls into can be difficult though. For that reason, many busy business
owners hire an accounting firm to manage their payroll for them. That’s
definitely an option worth considering if the whole process has you feeling
overwhelmed.
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