Hiring your first employee is an exciting step to take as a business owner. It’s a sign that your business is on the right track and you need help managing the growth.
However, before your new employee rolls up their sleeves and gets to work, there are a few steps you should take to get you both ready for a successful working relationship.
Come up with a job description and determine what you can pay
In order to hire the right person, first figure out what exactly you need them to do. Start by listing all the tasks you need help with and consider what skills a person will need to take these tasks on. From there, you can write a clear job description and come up with a job title that makes sense. You can research what other companies pay for this type of work and determine the appropriate wage to offer.
Forming a clear job description makes it easy to attract the right candidates. It also prevents questions about the role from coming up once the person starts working for your company.
W-2 employee or 1099 contractor?
You’ll need to decide if your new hire will be classified as a W-2 employee or 1099 contractor. The major difference between the two is how the individual’s income is taxed (You can learn more about W-2 employees and 1099 contractors here). Please note that the rest of the information in this blog post applies to businesses hiring a W-2 employee.
Apply for an Employer Identification Number (EIN)
You must get an Employer Identification Number (EIN) from the IRS before hiring your first employee. Your EIN is used to report taxes and employee information to the IRS and state agencies.
Prepare to record tax withholdings
Accurately recording the taxes you withhold on behalf of your staff members is one of the most important parts of being an employer. Tax records are not only required by the IRS, they are also used in your business reporting and other areas of your bookkeeping.
Verify the employee’s eligibility to work in the United States
You must confirm that your new hire is authorized to work in the US and submit an 1-9 form. You can verify eligibility by requesting their driver’s license, passport, social security card, or other government-issued documents listed on the I-9 form.
Get worker’s compensation insurance
Worker’s compensation insurance is another requirement for businesses with employees. It will limit your liability if one of your employees is injured while on the job.
Post the proper notices in your workplace
It may sound minor but employers are required to post information in their workplace that notifies employees of their rights under the law. You can get posters with all the necessary information from the U.S. Department of Labor or your local office supplies store.
Set up a payroll system
Using online payroll software managed by a professional can make paying your employees so much easier. Doing payroll every week or two is a lot of work, so outsourcing or automating it can be a big help.
Keep records on each employee
Once you hire someone, you should record their name, address, contact information, tax details and other relevant information. It can be beneficial to hold on to these details, even after they move on, in case anything comes up.
Hiring your first employee is a big milestone. With a little planning and the right resources, you can make it an easy process for both you and your new hire. If you need help with payroll or your other bookkeeping responsibilities, contact BookKeeping Express (BKE) today.