Employees

When you need to increase capacity, adding to your team is a logical step. It’s also a process that requires attention to, and compliance with, state and federal regulations.

Your first decision … do you want a new employee or do you want a contractor?

Choose employee if you have consistent need of help and want someone who will be committed to you during scheduled time frames and will perform duties for a pre-determined wage/salary.

Choose contractor if your need varies, and there are times you won’t need support services. Hiring a contractor also eliminates many of the wage and employment regulation management chores. However, you may not be able to secure contractor services at the time or price you want.

The Hiring Process

1. Secure an Employer Identification Number (EIN) from the IRS. You can apply for EIN online or contact the IRS at 1.800.829.4933.
2. Write a specific job description for the position you need and use that criteria for performance reviews.
3. Create an Employee Handbook that explains privileges and responsibilities of each employee, including attendance, time off and benefit arrangements.
4. Set up record for withholding taxes.  Click here for more information.
5. Register with your state’s New Hire Reporting Program.
6. Get worker’s compensation insurance.
7. Consult the IRS Employer’s Tax Guide to understand all their federal tax filing requirements. Being a good employer doesn’t stop with fulfilling your various tax and reporting obligations. Maintaining a healthy and fair workplace, providing benefits and keeping employees informed about your company’s policies are key to your business’s success. Here are some additional steps you should take after you’ve hired your first employee:

Set up Recordkeeping

In addition to requirements for keeping payroll records of your employees for tax purposes, certain federal employment laws also require you to keep records about your employees. The following sites provide more information about federal reporting requirements:

• Tax Recordkeeping Guidance
• Labor Recordkeeping Requirements
• Occupational Safety and Health Act Compliance
• Employment Law Guide (employee benefits chapter)
• Apply Standards that Protect Employee Rights

Complying with standards for employee rights in regard to equal opportunity and fair labor standards is a requirement. Following statutes and regulations for minimum wage, overtime, and child labor will help you avoid error and a lawsuit. See the Department of Labor’s Employment Law Guide for up-to-date information on these statutes and regulations.

Also, visit the Equal Employment Opportunity Commission and Fair Labor Standards Act.

Source:  http://www.sba.gov/content/hire-your-first-employee