Hiring employees to work at your fairly-new business can seem intimidating. You might be asking yourself, “Where do I even begin?”. Well, here at SPB, we care about partnering with small businesses and giving them the tools that they need to not only survive, but thrive. We share the same passion that you do– to set yourself, your team, and your business up for success. So this week, we are sharing step-by-step instructions for you on how to prepare yourself for your first couple of new-hires!
How to get your business ready to hire:
- Take a step back and think about if you need another employee. We know that is easy to feel overwhelmed with the responsibilities of owning your own business. Be very specific about the work that you need done by this employee and evaluate the time that it will take them. Make sure that you do the math on how many hours a week it takes to do the type of work that you are thinking about hiring for. If it doesn’t add up to a full time schedule, it will probably not be worth it to hire a full-time employee. Hiring someone on full-time is an ongoing cost for your business. Remember to think very carefully about whether you should hire an employee or a contractor.
- Ask yourself if your business is actually ready to hire someone. Can you afford the costs of a hire? You need to remember that it will cost you more than just salary to pay them. Make sure to do a cost-benefits for your time. Is the role you are hiring for defined? When it comes to hiring someone, you need to make sure that your company values and policies are established and that you plan to hire according to them.
- If you answered “yes” to the last two points and have decided that you are going for it, then it is time to get your EIN. You need to get a few legal things in order first, the first one being an Employer Identification Number. You can find where to apply for one of those here. An EIN is the number that the IRS gives you to identify your business. Think of it as this: a social security number for your company, except you use it on all documents and forms when it comes to paying your employees.
- Once you’ve got your EIN, it is time to prepare for all of your tax requirements. They differ from state to state, so it is important to seek some professional advice in your area. Some rules to keep in mind are..
- You will need to file form W-2 to report wages for each employee that you have.
- You must deposit and report unemployment taxes.
- Employers have to withhold taxes from your employees according to the IRS withholding tables.
- You must deposit your withholdings.
- You also need to withhold part of Social Security and Medicare taxes from each employees’ wages and pay a matching amount yourself.
- Employers need to withhold 0.9% Additional Medicare Tax on wages if the employee exceeds the threshold amount. This is where the costs of hiring really seem to add up. Your state can have certain obligations, too. That is why it is so important to contact your specific state’s Department of Labor to find out exactly what those requirements are.
- There are a few things to do to be positive that you’re good with the law when you hire someone. When you do hire, each employee will have to fill out a W-4 and an I-9 form. A W-4 will provide information on how much income tax to withhold from their checks. An I-9 will assure you that they are authorized to work in the United States.
- Decide how to handle your payroll. It is never as simple as writing a check. You need to make sure that you have a way for your employees to clock in and out, that you pay them on time, and give them a good experience, too. Choosing to outsource your payroll to a provider like SPB can help with that. At SPB, we train both you and your employees in Gusto, our payroll software of choice. We even run your first payroll with you! We choose to partner with Gusto because they make it easy for your employees to see their paystubs at-hand, fill out the required forms (W-4,I-9), track time, and so much more.
After you follow these 6 steps, you’re ready to hire! Now that you have finished all of the prep work, it is time to look for your first employee! Create a job description that attracts candidates and clearly lays out exactly what you are looking to hire for. We hope that your ideal candidate comes soon!