Ready to Hire Your First Employee?
If you handle all business matters--from producing and marketing your goods or services to fixing paper jams and your business has grown and now you're stretched too thin. It's time to consider hiring your first employee.
Taking the plunge Having a new employee--an extra pair of hands--should increase your revenue enough to pay the employee's salary and benefits, plus add to your profits. If you're not quite ready for a full-time employee, think about hiring part-time help, temporary help, independent contractors, or getting help from family and friends. Besides salary and benefits, don't forget that the cost of hiring includes the time it takes you to train a new person. During this training, you'll have less time to devote to other aspects of the business. Filing government reports and keeping proper records will consume some of your time as well. Hiring an employee requires that you complete paperwork and do certain tasks that weren't necessary when you were operating alone.
For starters, you need to do a background check. Don't turn the thrill of business growth into the agony of a shutdown by hiring the wrong person. Verify your candidate's qualifications and work history before you hire. Make sure they can do the job that you need them for before investing time in someone who can't help you.
Getting an Employer Identification Number (EIN)
Because you may be withholding taxes from your employee's wages, you must get an EIN (also known as a Taxpayer Identification Number, or TIN). Your EIN identifies your business to the IRS in the same way your own Social Security number identifies you. Applying for an EIN is a straightforward process: Simply complete Form SS-4, Application for Employer Identification Number, and submit it according to the instructions for the form. You can get both Form SS-4 and the instructions on the IRS website.
In addition to working with an employee screening consultant, you may want to think about hiring a payroll service to handle paperwork and tax withholding for you.
Research available services and consider whether a local accountant or online service would be best for you.
Stay tuned for more things to consider when hiring your first employee.
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IMPORTANT DISCLOSURE The information presented here is not specific to any individual's personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable—we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.