It is imperative for small businesses in the U.S to have the right payroll system given the current situation where unemployment is close to a 50-year low, minimum wage is rising and qualified workers are hard to find.
It is particularly crucial for small businesses to properly classify their workers as either independent contractors or full-time employees. Mistakes can mean paying more payroll taxes or violating labor laws. According to small business consultant and IRC Wealth Strategies CEO David Ragland, workers can be classified as employees when the employer has control over where, how and when they work while contractors have more independence or flexibility in doing their job.
Ragland added that it is also important for small business owners to determine whether they need a bookkeeper and accountant. He explained that a bookkeeper compiles financial records and produces financial statements while an accountant ensures that financial statements are accurate when filing tax returns.