One of the most exciting milestones in a new business is making the transition from sole proprietor to employer. You might have experienced unprecedented growth and need a helping hand, or you know that a new employee can help you grow beyond your wildest dreams.
Whatever the case, you’re likely excited to jump in and get started. Before you do, don’t forget to follow these six steps:
Step 1: Make Sure Your Taxes Are in Order
With the help of one of your area’s top tax accountants, you can make sure your taxes are completely in order before taking the next step. How you manage your taxes now might be far different from how you would address them when hiring employees in the future.
You will be the one responsible for making Social Security payments and withholding part of their pay for tax purposes. At this stage, you can also learn all about how long to keep employee tax records and what your requirements will be with state taxes, federal tax withholding, and more.
Step 2: Claim Your Employer Identification Number
When you become an official business with employees, you will need an employer ID number. This is so the IRS can identify your business entity. If you haven’t already got one, make sure you have one before proceeding with hiring employees.
Fortunately, the IRS makes this process easy by allowing you to apply for one online. Check with your accountant if you’re unsure what is required of you.
Step 3: Ensure Your Insurances Are in Check
You are likely familiar with the types of insurance that are in your best interests to have as a sole trader, such as health insurance, life insurance, and liability insurance. However, consider revisiting the types of insurances you have when you bring a new employee on board. Workers’ compensation insurance can be a requirement.
This insurance type protects your employees under state laws and ensures workers injured or killed have access to medical care and disability, death, and rehabilitation benefits. The coverage premiums you pay are based on your payroll and the type of jobs your new employee will do.
Step 4: Think About Your Needs
You may know you need a helping hand in your ever-expanding business but have you thought about what a new employee would do and what their title would be? Write down potential tasks, like making sales calls, serving customers at a counter, cleaning, or restocking shelves. The more you understand about the role you’re soon to advertise, the easier you will be able to explain it to potential applicants.
Step 5: Post the Position
Write a job application and post it in newspapers (if relevant) and online job platforms. Even your local notice boards can be suitable, depending on the type of job it is. If you don’t have time to check out potential applicants or manage the entire hiring process, you can also look at hiring a recruitment company to handle that for you.
Step 6: Hire Someone
After making sure you have all your legal ducks in a row, you can now interview the most suitable candidates for the role and make your hiring decision. Don’t forget to check references to ensure the person you hire will suit your needs the best. It’s also worth remembering that workplace diversity and inclusion can benefit you as much as it can your new employee or team.
Hiring a new employee can be daunting, but it’s also a massive milestone. By following the steps above, you can ensure the entire hiring process runs as smoothly as possible.
