So your business has started to see some major traction and now you need the supply to meet the demand so you want to scale up. Congratulations! It is time to hire your first employee.
Hiring your first employee might seem daunting and terrifying, but if you follow the steps below while adhering to your state and federal regulations, you should be on your way to becoming an Employer.
First things first, do you have a TaxID or EIN? If you don’t have one you will need to apply for one. You can do this by going to the IRS and completing a free application for one.
Next, you want to go to the Bureau of Labor and Statistics, which offers a plethora of information on labor and wages and provides suggestions of job descriptions and how you can word a requisition for hire. You can also get an idea on how much wages to pay an employee by reviewing the average salaries by states in the wages section.
A critical step here after you determine what the job description and criteria will be, is to make sure you know how you will classify your employee. Which would either be exempt or non-exempt. I cannot stress enough how critical this step is, because misclassfication of an employee as an exempt employee could be financiallly catastrophic for an employer if it comes to light the employee is entitled to overtime pay and the employee has never received it but has worked over-time frequently. If there is any confusion or gray area as to what to classify an employee, lean on non-exempt. The exempt requirements can be found here.
Next is to prepare forms and establish a record keeping system for both applications you receive and for employee tax withholdings. The W9 for independent contractors and W4 for employees are amongst the ones to consider for employee tax withholding.
After you have determined who your first employee is going to be, you want to make sure your employee fills out an I-9 statement and verify his/her eligibility to work in the U.S. by using E-verify.
Once, you determine that your employee is legally able to work in the U.S., provide them with an employment agreement to sign and determine if you would want them to sign a confidentiality/ non disclosure agreement to potentially protect your trade secret and if you may need them to sign a non-compete agreeement.
The next step is to report your new hire within 20 days to your states department of revenue. For example, here in Florida, you may do so by going to Florida’s Dept of Revenue’s website.
Sign up for workers compensation insurance. All companies are required to hold this coverage depending on how many employees you have or the type of work your employees provide, so that in the event of workplace accidents, it provides coverage to the employee and protects the business owner from heavy financial liability. For example, in the state of Florida, if you have 4 or more employees, you need this insurance and if you work in the construction industry, you need it with 1 or more employees whether full time and part-time.
After all this has been completed, post required state and federal labor notices such as workplace safety posters, minimum wage posters, child labor posters, and such, around your workspace in a conspicuous manner so all employees have access to visibility.
Finally, make sure you have an employee handbook that you require each employee to sign upon hire that explains the policy and procedures of the company that employees must abide by and consequences of not following them.
Ultimately, every business owner desires to have employees at any level of their business or another as part of their measure of success and this doesn’t have to be complicated. So while it is a big step in the right direction, sitting down with us can provide you legal direction and guidance before, during and after the hiring process. As a business attorney can ensure your business is in compliance with state and federal laws so you can focus on growing your business.
This article is by Ayesha Chidolue, the Managing Attorney at The Chidolue Law Firm. We are a boutique law firm that acts as a trusted legal advisors to small business owners. Attorney Chidolue is licensed to practice law in the states of Florida and New York. At The Chidolue Law Firm, we can guide you through organizational design as well as the process of hiring employees and crossing your legal T’s and I’s. Please contact us at firstname.lastname@example.org or call us at 407-995-6567.