So you’re ready to hire your first employee or employees, congratulations. This transition from business owner to employer is a significant one, marking a new phase in your company’s growth. It’s a move that can be extremely beneficial, but it’s also a massive step that shouldn’t be undertaken lightly.
To ensure you start off on the right foot as an employer, take heed of the following points for the best chance of success.
Get An EIN
One of the first steps in your journey as an employer is to obtain an EIN, an employee identification number. This number is crucial for tax returns and other IRS-required documents. Filing IRS Form SS-4 is the standard process, but you can also seek assistance with applying for an ein to ensure everything is done correctly. This step will make you feel prepared and compliant as you move forward.
Register With Your States Labor Department
You need to register with your state labor department because, as an employer, you will need to pay state unemployment compensation taxes. These payments go to the state unemployment compensation fund to assist with short-term relief for workers who lose their jobs.
Define The Job Role
Next, you need to define the job role clearly and effectively. What do you need employees to do, and what will their duties be? You need to be as explicit as possible to get the right people to fill the role and ensure successful ongoing employment. Try to determine the exact working hours, location, company needs, and skills and qualifications needed for the job role. The clearer you are, the more people will understand what the job entails, ensuring the right people fill the right roles and fire hiring appropriately.
Set Up Payroll
As an employer, you will need to withhold a portion of your employee’s wages for taxes such as federal income tax, Social Security tax, and Medicare tax. For instance, the federal income tax is a tax on your income that is paid to the federal government, while the Social Security and Medicare taxes are contributions to these social insurance programs. You will also need to make Social Security and Medicare payments. On top of this, you might also need to withhold taxes for your state too. You can get more information from the IRS; however, a payroll system set up to understand what you need to retain from wages and to ensure payments and correct compensation made of employees will help you get things right from the beginning.
Understand Labor Laws
If you’re not already familiar with labor laws in your state and at a federal level, then now is the time to get familiar with them. Understanding and complying with labor laws is crucial.
Not adhering to these laws can result in legal penalties, fines, and even lawsuits. You need to know your responsibilities as an employer and what your employee’s legal rights are pertaining to their employment. Knowing what you can and can’t do will help you to ensure you don’t accidentally break labor laws and that you provide a healthy working environment for your new employees. It can be worth looking at hiring an HR representative or using a third-party HR company to assist you here, but taking the time to understand labor laws will serve you well.
