Ready to hire your first employee? It’s an exciting moment for any small business, but there are also quite a few hoops to jump through before you create a job posting. Check out these basic first steps to make sure you’re covering all your bases before you bring on help for the first time.
Take Care of Legal Issues First
If you don’t have one already, get an employer identification number (EIN) from the Internal Revenue Service (IRS). You can do this by filing Form SS-4. You’ll use this number for tax returns from here on out. Additionally, you should register your business with the labor department in your state. When you have employees, you need to start contributing extra taxes to the state unemployment compensation fund. Also consider getting worker’s compensation insurance, regardless of how physical (or not) the job may be.
Prepare for Payroll
Hiring a new employee always requires working capital. In addition to salary and benefits, you also need to get a payroll system in place that takes care of you and your employees’ tax obligations. This includes withholding federal and state income tax, Social Security tax, and Medicare tax from each paycheck. You’ll need to make regular contributions to both the IRS and your state.
Brush Up on Federal Discrimination Laws
Avoid the potential for legal liability (or even a lawsuit) because of inadvertent discrimination, starting as early as the interview process. Remember to avoid questions related to age, sexual orientation, marital status, race, or religion. You’ll also want to review prohibited practices and employee rights from Title VII of the Civil Rights Act, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Family Medical Leave Act. The Department of Labor has resources on notices you may be required to post in the workplace.
Get Employee Paperwork Ready
Once you hire one or more employees, be prepared to submit and record the proper paperwork. You’ll need certain pieces of personal information regarding each person’s employment, which you can find from the Department of Labor. Employees need to fill out an IRS Form W-4, and you’re required to fill out a Form I-9 to verify their employment eligibility.
Hiring your first employee requires more than just finding the right person. Make sure you perform your due diligence every step of the way to ensure proper legal and tax compliance.