Payroll v. Payments to Nonemployees Businesses separate payroll for employees from payments to other workers that are categorized as non-employees for some very good reasons. Mixing the two types can cause compliance concerns, as employees are directly covered by their employers for tax withholding and reporting, unemployment insurance, labor regulations, and more. This is why non- employees most often are paid through separate
The progressive EORs are going beyond simply processing pay; they’re consolidating payment systems across all worker types.
mechanisms, often at a flat amount, sometimes triggered by invoices. Non-employees generally are not covered by the same tax and labor requirements and benefits that employees working for the same business may have. Keeping payments to these different types of
workers in two systems has made sense for many decades. Accounts payable handles the non- employees, and those non-employees are not tracked through the payroll systems. Payroll stays in its lane, only handling payments to employees. But this may be changing.
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ISSUE 14 GLOBAL PAYROLL MAGAZINE
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