- Determine the General Position
What is your goal in hiring the employee? This depends not only on the type of business and where growth might have occurred, but also on the personal needs of the owner.
- Is it to allow someone else to manage the store so that you don’t have to work 14-16 hour days?
- Is it to work on administrative-level tasks, thereby freeing up your time for billable (or higher billable) hours and projects?
- Will this position be full or part time?
- What is the going rate in your market, and what are you willing to pay for someone with more experience?
- Obtain an EIN
If the business has not already done so, it must register as a business entity in their state and also apply for and receive an Employer Identification Number from the IRS. Partnerships and corporations will already have one, but many sole proprietors will not have done so yet.
- Employer Requirements
Employers have many responsibilities when it comes to reporting on their employees, wages and benefits.
- Reporting new hires to their state employment department or similar agency.
- Income tax withholding: Employers must withhold and remit those funds at state and federal levels.
- FICA taxes: Social Security and Medicare taxes must be withheld at the appropriate rates and remitted to the SSA.
- Unemployment Tax: These are not deducted from workers’ pay, but are a direct cost of the business.
- Workers Compensation Insurance: Most states require businesses (even with only one non-owner employee) to obtain insurance to cover employee workplace injuries. Some states also require Disability Insurance.
- Employment Eligibility: Employers must ensure that new employees are legally allowed to work in the U.S.
Depending on whether an employee is full-time or part-time, and the state/community the business is located in, there may be different requirements as to providing sick time or other benefits.
- Seek Professional Advice
While there are many online resources for information on this, and many small business payroll systems offer guides, seeking the advice or service of a payroll or accounting professional, such as a CPA, can save time and prevent costly penalties for non-compliance.