If your small business has reached that point where you can’t keep up with inquiries or fulfill orders fast enough, congratulations! If you’ve got a steady cashflow and your business has become larger than you can operate it on your own, it might be time to hire your first employee.But where do you begin? How do get from needing another worker to hiring your first employee?
1. Get your EIN.
An Employer Identification Number (or Employer ID Number) is required of any business with employees; it’s obtained through the IRS and is used whenever you make contact with them, such as when reporting taxes.
2. Fulfill IRS requirements.
This means taking care of W-4s, where your employees select deductions, and W-2s, the wage and tax statement; your business is responsible for withholding employment tax for your employees.
The IRS also requires an I-9 form, verifying the employee’s right to work in the US, to be kept on file for each employee.
3. Fulfill state requirements.
Just because you’ve registered your business in your state, that doesn’t mean you’ve met all the requirements for having employees in that state. There are a few things you’ll have to do at the state level, and the exact requirements will vary by state.
Here are a few actions you’ll need to take to get your business ready for employees:
- Register each new hire with your state’s designated agency
- Familiarize yourself with your state’s employee leave and disability laws
- Determine your state’s worker’s compensation laws and satisfy all requirements
- Double-check your business license and permit requirements and make sure your business is up to date
4. Hang all required notices.
Your requirements will depend heavily on your industry, but there are many, many types of notice requirements for various labor acts on employment topics ranging from polygraph tests to health and hazard. The Department of Labor is a great resource for identifying and meeting your notice requirements.
5. Start interviewing!
Remember, keep an open mind; sometimes, some of the best employees are found through out-of-the-box thinking!
Just a reminder: I’m not a lawyer, and this article is not a substitution for advice from a corporate lawyer or advisor familiar with jurisdictional-specific business issues.
[How did you prepare your business for its first employees? Tell us about it in the comments!]