You had a great idea for a business and have incorporated your company. Now it is time to hire your first employee. But where do you start employing staff? And once you find a worker who is the perfect fit for your business, how do you make sure that you have completed every hiring-related step you need to under the law? These are complex questions, so it is generally helpful to approach the employment situation one step at a time.
Who Do You Need?
When you are looking for employees to hire, it is important to carefully consider the kinds of work your company needs done and who may be able to execute this work most efficiently and effectively. You have the option to hire full-time employees, part-time employees and independent contractors. You may also benefit from outsourcing certain business operations to companies that handle specialized kinds of work and overflow. Committing to the wrong type of employment situation may cost your business time, money and morale.
Employing staff, both part-time and full-time, are generally protected under federal and state labor laws. Many are generally eligible for certain kinds of benefits and may need to be covered under workers’ compensation insurance. Your company will also be responsible for ensuring that taxes are withheld from their paychecks.
By contrast, independent contractors are generally paid less, not entitled to benefits and do not have their taxes withheld automatically. However, these potential benefits of hiring contractors may be outweighed by the fact that under the law, many elements of their jobs may not be specifically controlled by the companies they work for. Because companies that either intentionally or unintentionally misclassify their workers may be held liable for that decision, it is critically important when you are looking for employees to hire is to understand the nuanced distinctions between contractors and employees before hiring any.
The choice when you are looking for employees to hire or a contractor will largely depend on the type of work you need done. In general, employees tend to handle work that is central to business operations. Outlining your future workers’ job descriptions will help you determine what kinds of workers you need. You will then be able to determine what kinds of education, experience and skill-sets you require in an applicant. At that point, you can begin advertising for potential candidates and employing staff in any number of ways.
The Nuts and Bolts
Once you have made a hire, you will face a significant amount of paperwork related to your new worker. It is worth noting that if you hire a contractor through a staff agency, this paperwork will be somewhat minimized as the staff agency’s legal and practical obligations to that employee will differ from your own.
One of the first steps you’ll need to take is registering with certain government agencies. If you have already obtained an employer identification number through the Internal Revenue Service, you will first need to register with your individual state’s labor department. Each state imposes various forms of taxation on employers, including unemployment compensation and other payroll tax deductions. Your state’s new hire reporting agency will also need to be made aware of your arrangement. In addition, you will likely need to obtain workers’ compensation insurance coverage for any employees you hire, though not for any contractors.
Additional tax-related paperwork will need to be filled out for your new hire, including a Withholding Allowance Certificate and Employment Eligibility Verification. If you have not already set up a payroll system that will allow you to accurately withhold payroll tax deductions including federal and state taxes from your employees paychecks, it is important to do so now.
At this point, it is important to speak with your legal representation about “crossing your T’s and dotting your I’s” in regards to any other obligations you may have legally in regards to your new employee(s). Labor laws, worker safety laws and filing requirements may dictate that you take additional actions on a general level that apply to all your workers at once, not just specific action related to a new hire. Hiring your first employee provides a great opportunity to complete these actions definitively.
Seeking Valuable Guidance
The process of hiring your first employee may be a daunting one. Thankfully, you neither need to approach nor navigate this process alone. The team at LawTrades has significant experience with all aspects of the hiring process. We can help you draft necessary documentation, file hiring paperwork with the proper staff agencies and navigate all the other legal tasks that the beginning of the company-worker relationship requires. Please consider reaching out as soon as you know what kind of worker you are looking for so that we can support you every step of the way.