Hiring your first employee is an exciting step as a small business owner. However, since this is your first time hiring, you might be aware of all the rules and best practices that you should be following. To help you remain in compliance with state and federal employment laws and set your business on the right path to building a team of legitimate and capable employees, there are few things you need to do before you bring anyone on board:
Create a Hiring Plan
First things first, you need to come up with a plan for which positions you’re going to need to hire for, when you’ll need to hire them, and how you’ll be able to afford to do so. If you weren’t aware, hiring is one of the biggest expenses your business will take on. As such, you want to have a realistic plan in place to prevent yourself from digging your business into a financial hole.
In order to hire strategically, you should be looking at the biggest weaknesses in your operations and start with the positions that can address those as well as your current budget and forecasted growth.
Register & Get an Employer ID Number
To legally be able to hire anyone, you first need to do two things:
- Register with the state labor department. Any business that provides employment must register with their state labor department and pay taxes which will be contributed to the state’s unemployment compensation fund.
- Get an Employer ID Number (EID). To obtain an EID, you need to complete Form SS-4 and submit it to the IRS.
Figure out Payroll
One of your most important obligations as an employer is ensuring that you have a good payroll system in place. After all, you’re not likely going to have employees for long if you can’t pay them on time or keep making mistakes on their paychecks. While payroll might sound complex, especially if this is your first business venture, it doesn’t have to be.
There are plenty of user-friendly business payroll services that take care of everything so you can feel confident that your payroll is accurate and punctual—two of the most important factors for maintaining employee satisfaction.
Get Workers’ Compensation Insurance
Before you bring even a single employee on board, it’s essential that you purchase a workers’ compensation insurance policy. Even if work will be done sitting down in an office, you never know when an accident or injury can happen in the workplace. Not only will this insurance policy help protect you and your workers, but it’s required in many states.
Prepare the Right Forms
As an employer, you will be responsible for having new hires complete the following forms:
- Form W-4: The Withholding Allowance Certificate determines how much will be withheld from the employee’s paycheck for taxes.
- Form I-9: The Employment Eligibility Verification Form ensures that employees are legal to work in the U.S.
Keep in mind that you will also need to file Form 940 each year for every employee you’ve paid $1,500 or more.
Order & Post Workers’ Rights Notices
There are certain posters that you must have in the workplace regarding employees’ rights. To determine which ones you are required to have, you should refer to the federal site for the Department of Labor as well as your state’s.
These posters are free to order and cover topics such as minimum wage laws, safety in the workplace, and other important responsibilities and rights. While you are required to have these posters displayed, they can also help avoid confusion and conflicts if everyone is informed about these aspects of their employment.
Establish Employee Guidelines & Safety Measures
Creating an employee handbook may seem outdated, especially if you don’t have strict requirements about the dress code. However, it is a necessity. This doesn’t mean you have to create a hefty handbook that takes hours to go through during the orientation process, but you should cover some of the most important guidelines to employment, including:
- Your sexual harassment policy
- Expectations for workplace conduct
- Paid time off and sick time policies
- Employee rights
- Employer responsibilities
- Information on your workers’ compensation policy
You also need to establish safety measures within the workplace to help prevent accidents and injuries. In that same vein, you should have a plan in place for when those occasions do arise.
While this list is just a starting point, following these best practices will set you in the right direction. Make sure to consider your particular industry and the special circumstances you may need to accommodate for. And, don’t forget to enjoy the hiring process, you’re taking another step toward growing your business and achieving your goals.