Hiring workers is no big deal, right?
Wrong! Hiring your first employee is a huge step for your business. It’s not only an exciting time due to the expansion of your business, but there is also a lot of responsibility that comes with it.
From tax forms to government registrations, being an employer has several weighty obligations. It might be tough to get started, but it’s important to make sure you follow all the legal rules at the offset.
If you’re wondering how to hire an employee, you’ve come to the right place.
Hiring an Employee Checklist
If you’re hiring your first employee you need to know what steps to take. Unfortunately, you can’t wing it. If you do, you may face big problems down the line.
Although rules and regulations vary from place to place, the basic foundation is similar. Read on for a handy checklist.
#1. Employee? Or Freelancer?
If you’re hiring your first employee, you need to figure out whether they will be an independent contractor (freelancer) or an employee.
An independent contractor is somewhat easier and less costly. There are not so many legal obligations, such as insurance or withholding taxes. A freelancer has flexibility and freedom over their own working times and autonomy.
If you hire someone and have complete control over their working hours, they are not an independent contractor. And if they are an employee, there are things you need to do. Make sure you get it right, or you could face major consequences.
#2. Start the Paperwork
Before hiring your first employee you need to fill in all the right paperwork. Initially, you should get an employer ID number (EIN). You will need this number for filling in tax returns and other IRS documents.
You will also need to register with your states labor department. After hiring workers, you must pay State Unemployment Compensation Tax. The payments help bring relief to workers in your state who have lost their job.
Once you have started hiring workers you need to get workers compensation insurance. This is to protect workers who might get on-the-job injuries.
It is a requirement for most businesses to have compensation insurance. But there may be exceptions for smaller companies. Do your research and figure out if it’s required of you.
#3. Know the Rules of the Game
After hiring your first employee, you must make sure your business complies with federal law. For instance, discrimination based on age, disability status, or gender. Also, religion, national origin or race.
If you refuse to hire someone because of one of these reasons, they could hold you as liable for unlawful discrimination. Even if you don’t do it purposefully.
For example, if you decide not to hire a pregnant woman because she’ll have to take maternity leave soon. They may consider this as unlawful discrimination.
You also need to know what the poster requirements are in your workplace. Government agencies require that you display specific posters in the working environment. The posters provide information about workers’ rights and are a requirement.
The key is to make sure you know the rules before you start hiring workers. It’ll save you a lot of trouble in the long run!
#4. Be Ready for Tax Time
After hiring your first employee, you will need to start doing their taxes. You need to withhold a part of their income and deposit it to the IRS. You will also need to make Social Security and Medicare payments to the IRS.
Your employee will also need to fill out the I-9 form. This is an Employment Eligibility Verification form which verifies that an employee is allowed to work in the US.
There may be other forms to fill in too. Rules differ from state to state and requirements change depending on the nature of your business. Go to the IRS website to find out the requirements in your locality.
#5. Get Organized
Once you’ve got your head around the paperwork you need to come up with an organized system.
Try creating a file for each employee you hire. You can file away all their job-related documents. Such as their IRS forms, job application, sign-up forms, and performance evaluations.
You should keep medical records separate from other documents. They should also be in a confidential file and locked in a cabinet. The same applies to the I-9 form.
If you’re organized, you’ll be ready for any paper-work related questions that come up in the future.
#6. Don’t Forget Health and Safety
Every employer must follow the Occupational Safety and Health Act (OSHA).
This Act requires that you need to provide a workplace free of hazards. You need to train employees to do their jobs in a safe manner. And you will need to keep detailed safety records and notify government administrators if a serious accident occurs.
#7. Be Ready for Your Newbie
You’ve, no doubt, been working alone for quite some time. But now the business has kicked off, you need to make sure your new employees are joining a professional, trustworthy business.
Create an employee handbook to describe your business policies. Although it’s not a rule, it is a handy document to have. It helps the employee to know exactly what’s required of them after they sign their contract.
You should also make an online schedule. This will help you to organize your employees and their working hours. It will also help you keep on top of their payroll, and time off.
Don’t Let the Paperwork Scare You Off!
As you can see, hiring your first employee is not an easy task. You’re effectively taking responsibility for someone else’s livelihood after all. These rules, regulations, and paperwork are there for your employee’s protection AND yours too!
So, don’t let it scare you off. Follow this hiring an employee checklist. Your little company may grow faster than you’d ever imagined.
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