Hiring your first employee can be tough and complicated. There are state and federal laws to consider and basic in house systems to consider. Here is a quick list to get everything you need before hiring that first employee.
1. Create a clear job description
Make sure you are clear about the type of person you want to hire, the skills required to do the job and the range you are willing to pay. Adhere strictly to those ranges.
2. Determine who is doing the recruiting
Whether that is internal or external there is a lot to consider. Such as,
* Writing the description
* Advertising the job (where)
* Communicating with prospects or the recruiter
* Answering questions about the job and your business
* Interviewing and screening candidates
* Communicating results to candidates
3. Applying for the Employee Identification Number
You must have one of these before you hire and pay an employee. It*s IRS form SS-4. You can apply online and it only takes a few minutes.
4. Maintain accurate tax records
You are required to keep tax records for 4 years. Most accounting software programs will keep them for you.
5. Keep track of withholding taxes
The IRS requires you to send them the yearly income of each employee. Your company is required to withhold the right taxes. Make certain your payroll company will do that and that you have sufficient funds to cover. Several forms are required. Those are:
* W-4 form. Each employee has to fill out a W-4 before they start work. This information is used by you to help figure out the amount of withholding tax for each of your employees
* W-2 form. As an employer, you need to report your employee*s income to both your employee and the IRS. This is done with a W-2 for full-time employees. It includes their taxable income, retirement contributions and benefits.
* State forms. Each state has a separate tax form, so make sure you consult a CPA or tax professional or the Georgia Department of Revenue to make sure you have the right form.
6. Remember the key dates and tasks
There are several important IRS related dates and tasks to remember throughout the year:
* January 31. You need to send a W-2 form for each employee to the IRS. This includes state taxes.
* End of February. A copy of each completed W-2 must be sent to the Social Security Administration. This information is used to calculate each employee*s wages for the previous calendar year.
* Three days of hiring. You must complete an Employee Eligibility Verification form or I-9 and keep a copy on record for Three years. The employee should complete this with the employer signing and dating it.
* Within 20 days of hiring employee. You need to contact your state*s New Hire Reporting Program. Go to the Georgia Department of Revenue website (if you live in Ga). Each state matches new hire reports against other public records to ensure the accurate payment and receipt of public assistance.
* During the year. You must file an IRS form 940- also called and Employer*s Annual Federal Unemployment Tax Return if:
o You paid wages of $1,500 or more in any quarter, or
o An employee worked for you in any 20 or more different calendar weeks of the year.
o Funds from the FUTA tax are used to pay unemployment compensation to workers who lose
Your internal systems
7. Obtain and Display posters about Employee Rights
All employees are entitled to certain minimum rights under state and federal law. However, many employees may not be aware of their rights or understand them. To help employees out, you are required to display posters about employees* rights in your workplace. You can find out more about the Department of Labor*s workplace poster requirements for small businesses on their website. You can also download the posters from the site.
8. Obtain Workers* Compensation Insurance
All businesses are required to have workers compensation insurance. This can be obtained through:
* A private provider. Check with local independent insurance agency. If you need a referral, I have just the group for you.
* Via self-insurance. This is when you can set aside money from the business to cover compensation payments to your employees.
* Each state has a workers* compensation insurance program. You can find out more about these at the Office of Workers* Compensation Programs within the Department of Labor.
Insurance is easy to forget until you need * or your employees need it. When you*re running a business things don*t always go to a plan. Think of it as a protection now, should things go wrong in the future.
9. Set up a Payroll System
Your options when setting up a payroll system include:
* Doing it all yourself. Bad idea if you are new to hiring.
* Outsourcing the set up to your accountant or bookkeeper. (If you don*t have one of those, we need to talk). Make sure your accounting software (Quickbooks, etc.) can address all your payroll needs. Adding payroll to your accounting software should make paying employees painless.
o Look for software that makes it simple to stay compliant
o Can pay your employees directly and efficiently
o Files reports with the IRS
o If you need more help with this, contact my office for referral information
10. Keep a file for Each Employee
It*s important to keep up to date and accurate records for all your employees so that you can use them to figure out their pay and entitlements. You will also need records to give your employee if they request them, and they will be very useful in the event discipline is needed.
Each employee file should have:
* Full name, address and contact details
* Emergency contact details
* A signed copy of their employment contract (if you don*t have one, we need to talk)
* Tax details
* Preferred payment method and details, for example internet banking
* Any other important information about them
* Create an electronic version of this file and back it up to a cloud system like dropbox, google drive or office 365.
11. Make it easy for your Employees to Access all your Cloud Programs
Depending on your type of business, chances are your employees will need to access to non-confidential company information such as policies, training manuals, procedures or job-specific instructions. Consider using a single sign-on service to make it easier. Check out OneLogin, Okta or Google for Work. You can set up each employee with access to personalized information and if you set yourself up as administrator, you can also restrict their access if you need
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