How to Hire Your First Employee
How To Hire Your First Employee
Finding your first employee is a very special experience in the life of an entrepreneur. If you’re starting 2017 off with new employees, congratulations. We can only imagine how hard the road has been and finally you’re here. We want to help by celebrating alongside with you in this momentous occasion, but there are some elements in business you need to understand first.
Here are a few guidelines to help one tread the path with more confidence and ease of approach for a new employer:
- Get an Employer Identification Number (EIN)
- The first step to take even before initiating the hiring process is to register oneself as an employer with the IRS (Internal revenue Service). Apply for the EIN, also known as Employer Tax ID, in order to be able to manage the tax reporting and other requirements with the IRS.
- Establish a process to maintain tax withholding records
- An employer must keep detailed records of tax withholdings for the employment offers for at least 4 years, as required by IRS. So, it’s necessary to setup a process beforehand to keep sound records of the 3 tax withholdings from each employee’s payroll that an employer is expected to maintain. These 3 types of tax withholdings are:
- Federal Income Tax withholding
- Federal Wage and Tax statements
- State Income Taxes (if applicable)
Finding the right person
- Screen each application for the job posting very carefully. If affordable, an employer should conduct at least one background check (for criminal records, prior employment records etc.), test for illegal substance abuse, behavioral screenings (example: psychometric tests, aptitude and skill tests etc.) apart from one or more rounds of interview, as necessary. It is of immense importance to select the person who best fits the employment criteria, as otherwise it may become a huge penalty on the business soon.
- During the interview
- It’s always useful to know to the grey areas before prodding someone to get to know better. While on an interview, according to US laws and regulations, an employer must refrain from asking questions about the applicant’s age, sexual orientation, race, marital status and religious affiliations. Also, it’s one of the best practices of offering an employment to always seek references. To hire someone well recommended by a reliable source may ensure a trustworthy employee in future. Discuss the job details, compensation and benefits offerings and the general expectations of the employee before finalizing the deal.
- Verification of the would-be employee’s work eligibility
- Ensure to check the selected applicant’s eligibility to work and earn in the US – by filling out the Form I-9 (Employment Authorization Document). Also, the employer is required to file an I-140 form (Immigrant Petition for Alien Worker) on behalf of the employee, with the USCIS (U.S. Citizenship and Immigration Service) in order to avoid criminal and civil lawsuits and audits to the company’s payroll.
- Mandatory record-keeping for each new employee:
- The U.S. Department of Labor requires that an employer ought to maintain the following 12 records on each employee for the entire length of their employment. The employer must collect and save these information right at the beginning of the employment:
- Employee’s full name and SSN (Social Security Number)
- Complete mailing address, including the ZIP code
- Date of birth, if the employee is less than 19 years of age
- Sex and occupation
- The time of day and the day of the week that marks the beginning of the employee’s workweek, number of hours to be worked each day and the total hours logged on each workweek
- Frequency of the payments of the employee’s wages (weekly, bi-monthly etc.)
- Rate of Regular hourly payment
- Total “straight time” earnings on daily or weekly basis for each workweek
- Total overtime earnings on each workweek
- All changes (additions to or deductions taken from) on the employee’s wages
- Total wages paid on each pay period
- Date of the payment and the pay period covered by each pay-slip
- There are another set of documents and forms to be completed and filed with the IRS and/or the state’s department of labor for the income tax and audit purposes, such as: a W4 form to withhold taxes, a W2 for the social securities etc. The employer should get in touch with the federal and state tax authorities to know in details about the required documentations.
Workers’ compensation insurance
All businesses must procure workers’ compensation insurance from the moment they start to employ their first employee. The employer may choose to opt for insurance through any commercial carrier or through the state’s workers’ insurance program.
Reporting requirements for the state’s new hire reporting agency
The employer has to report the new employee’s records to the state’s new hire reporting program.
Create an on-boarding process
Once the all-potential employee has been chosen, interviewed, important records are collected and ready to be filed/maintained, there remains only one more formality to complete – an onboarding process. It is not a mandate by any institution. But it is the most useful step for a newcomer into the workplace to start contributing productively as soon as possible and for the employer to ensure that there is the least hiccups down the road for the employee. Design a program suitable to the business’s needs and expectations.
With all the hassles and mandates taken care of, now its time to relax. Sort of. 🙂