My answer to Do small businesses without employees stay that way?
Answer by Ken Larson:
Bringing an employee onto a payroll is a major step. The company assumes workman’s compensation, tax and other obligations enacted by federal and state law.
Many business use contractors, keeping only the owners on a limited payroll to avoid the self employment tax at year end. Contractor payments are reported to the IRS on a 1099 form once a year and the obligations cease there.
Companies involved in products are often re-sellers or have other firms licensed to work with them in producing and distributing their goods.
Viewing the number of employees statistically in this high tech, automated and synergistic age and drawing conclusions regarding success and revenue may be very misleading indeed.