If you’re a new small business owner, learning all the compliance terms you need to know may feel like learning a new language.
In this Small Business Smarts, Victoria Jordan and Laci Buzzelli break down a few important compliance terms every entrepreneur should understand.
For more information, visit ADP.com/SPARK
Video Transcript:
Victoria Jordan, founder of PureWork Studio
The more I learn about running a business, the more I realize there's a whole language to compliance. And if you don't understand the terms, it's easy to make mistakes. So today, Laci Buzzelli from ADP is going to school me on a few key terms every business owner should know.
Victoria Jordan, Senior vice president and general manager, small buisness services, ADP
Hey Laci, I'm realizing compliance has its own vocab. If I'm just getting started. What are a few key terms that I need to understand?
Laci Buzzelli
Vicky, you're not alone. Managing compliance can be really complex. There are a few core terms that every business owner should know. Let's start with a big one. Employee classification. There are criteria that determine how to classify employees, whether they are W-2 employees or they're a 1099 contractor. Employee classification has a big impact on the way you manage your business.
Victoria Jordan
I actually recently read a stat that only 27% of small business owners who work with 1099 contractors are extremely confident that they are complying with regulations. That seems very, very low. And I think that being clear on that and getting it right from the start feels like it would be super important. Right?
Laci Buzzelli
Exactly, it really is. And effectively paying your people through payroll taxes, it's all part of compliance. And the next term you should really know is payroll taxes and compliance. As an employer, you're responsible for withholding taxes from your employees paycheck and making sure those taxes are paid on time. It also includes items like filing all new hires to the appropriate state agencies to ensure you're executing and complying with any employee wage garnishment.
Some of these responsibilities can be a surprise to small business owners. Another important term is record keeping. You need to keep accurate records of employee hours, wages, tax documents and HR confidential information. There's a lot.
Victoria Jordan
So there are key operational aspects to running a business that I'm learning. And it seems like a lot of that ties back to staying organized.
Laci Buzzelli
Exactly. Good record keeping and staying organized helps protect your business and helps you manage compliance effectively. And closely connected to that are wage and hour laws. These cover things like minimum wage, overtime and how employees are paid. And those roles can vary by state and even your local jurisdiction. So it's really important to stay up to date. Another term you might hear is HR compliance.
This is really about adhering to all labor laws that affect an employer, local, state, and federal. It encompasses everything from when a company is required to have an employee handbook to understanding the Family and Medical Leave Act requirements.
Victoria Jordan
So is it true that ADP can create an employee handbook for me when it comes time to do that?
Laci Buzzelli
Yes, Vicky, we sure can. Our goal is to make things manageable so you can focus on the day to day of running your business.
Victoria Jordan
Thank you so much, Laci. This has been great. Compliance might sound complicated, but it really comes down to understanding the basics and building the right systems from the start. To learn more about the tools and resources that can help you manage compliance with confidence, visit ADP.
