Whether you just recently started a small business or you have been up and running for a while and working as the entire staff on your own, there may come a time when you decide you need to hire your first employee. Before you jump into adding new staff to your workforce, be sure you are ready for it, as there are things you need to have set up in order to start off correctly.
If you think you are ready to take that step, here are a few reporting and regulatory issues you should think about:
- Determine the General Position: Think about why you are looking to hire a new person. Is this person going to be someone that will manage the store some of the time that you will not be there? Is he or she going to do administrative tasks to free up some of your time to do billable work? Will the new employee work full or part time? And what are you willing to pay the person for their services? These are few very important questions that you will need to think about before you even begin looking to add a new person to your business.
- Obtain an EIN: Before you hire your first employee you must request an Employer Identification Number from the IRS. If your company is a partnership or corporation, you will already have one, but a sole proprietor will most likely need to request one.
- Employer Requirements: Check to be sure your soon to be employee can legally work in the United States. Once you’ve hired someone, you must report this to your state employment department. Before you start paying the new hire, get everything ready to easily pay in income tax withholdings to the IRS and state, FICA taxes at the appropriate rates, and unemployment taxes.
- Decide on Benefits: Depending on your state and if your new employee is full time or part time, there may be certain requirements on benefits you must offer. Look into rules on benefits, such as sick time and health insurance.
- Ask a Professional: Although you can find out a lot about rules on hiring employees online, it does not always cover every detail you may need to know. You should still contact a professional, whether it is an accountant or a payroll service provider, they can guide you to making sure you have all of your bases covered. In the end, it will save you time and help you avoid penalties for non-compliance.
Contact your accountant today to set up an appointment to go over your strategy for your new hire. They know the requirements for the type of business you own as well as for the state your business is in.