5 Things You Need To Know Before Hiring Your First Employee

Preparing to hire your first employee can be an exciting time. You’re growing your business, taking on help from those who can assist you in running operations, and generally moving in the right direction. But are you? Before you even put up that job ad, there are some important aspects you need to consider and put in place before hiring your first employee. Take a close look at the following items to make sure you’re ready.

Employer Identification Number (EIN)

Every single employer in the US needs an EIN. Your EIN is your employer identification number, and it’s how the IRS identifies your business. It’s not just a formality; it’s a crucial step to ensure you’re operating legally and above board. You should not be hiring without an EIN, and you most definitely can’t handle employees’ taxes without one. So, before hiring your first employee, obtain your employee identification number to ensure you’re legal and compliant.

Taxes

As an employer, you’re legally required to maintain records for at least four years and withhold taxes for employees. This means you need to be familiar with local and federal tax laws that will impact you, such as income tax, social security tax, and Medicare tax. Be clear on how you keep and maintain your records, and approach taxes as an employer. It can be a good idea to get legal advice from a tax or employment lawyer to know what you need to do and what is expected.

Insurance

At minimum, you need workers’ compensation insurance.  Hiring your first employee means your legal responsibility is going to expand. Not having the appropriate insurance can affect you legally, personally, and professionally. You need protection if your employees get injured or fall ill while working for you. This means you could be personally liable for any medical expenses or lost wages, which could have a significant financial impact on your business.

Onboarding

Simply hiring your employees and setting them right to work with little or no training isn’t setting them or you up for success. You need a comprehensive onboarding process that guides them through you, your company, what you do, what standards you expect, and what their role entails. This process, which can be spread out over time, ensures that you’re arming them with what they need and setting them up for success. It’s not just about compliance; it’s about setting a strong foundation for your working relationship. Being on top of details helps you maintain leadership and keep your employees happy.

Set Up Payroll

Payroll is how you pay your employees. This needs to be set up before hiring your first employee, not just before they receive their first paycheck. Using payroll software can take the hassle out of your payroll as you can set it up to make payments automatically. This not only saves you time but also ensures accuracy and consistency in your payroll process. It’s a huge way to feel more in control of your business operations. In addition, determine your pay structure and frequency, open a payroll bank account, and obtain all the employees’ details so you can pay them correctly.