Hiring the first employee for your small business is a big step. It means your business has grown to the point where you can’t keep up with demand on your own. It’s a sign of progress and great things to come. Congratulations!
But wait. Hiring an employee is a lot more complicated than you might think. So, before you take out that help wanted ad, be sure you’ve done the work to make it a lasting, profitable partnership.
The Numbers House team knows that hiring is confusing, and that’s why we partner with small businesses to make onboarding and payroll a turnkey process. If you’re thinking about making your first hire, here are three questions to ask before you take the plunge.
1) Can You Pay Them?
Are you really bringing enough money to sustain an employee? And are you just thinking about their salary? If so, that’s not enough. You need to consider taxes, benefits like health insurance and retirement and more. Make sure you take everything into account so your new employee doesn’t break your budget.
On top of that, payroll is a much more complicated process than just cutting a check. Your employee will have income tax withholding, possible wage garnishments like child support, and accruals like paid time off to consider. You need to be able to handle this task on time every pay period or partner with a professional payroll service to handle it for you.
2) Are You Registered?
The state and federal governments have requirements for employers, too. For the federal government, all employers must get an employer registration number from the IRS by filing Form SS-4, which can be found on the IRS website. You also need to fill out Form I-9 to verify that your employee is eligible to work in the U.S.
On the state level, there are more requirements. You need to register with your state’s labor department to pay state unemployment taxes. You must also report to your state’s new hire reporting agency, which locates parents who owe back child support. There may be more requirements that vary from state to state, so be sure to research what’s needed in your location.
3) Can You Keep Records?
When you have employees, documentation is everything. Employers must be organized and keep employee records updated and secure, preferably under lock and key. IRS forms, applications, benefits sign-up forms, performance evaluations and many other documents are vital to protecting your small business in case disputes arise. Have a system in place and put in the time to make sure these records are up to date.
Need an employee but aren’t sure you can keep up with the busywork? The Numbers House can help. We offer services like payroll to get you out from behind a desk and back to work growing your business. For more information, call us at (865) 294-7300 or email us at email@example.com.