Exciting times! Your business is growing and it’s some time to bring someone else on board. It’s a major milestone in the growth of any small business.
Now that you’ve found someone who’s the perfect fit, there are some steps you need to take before they can start working with you.
▶️ Employer identification number
This is used on tax returns and other documents you submit to the IRS. To get one, you need to file Form SS-4, which you’ll find on the IRS website.
▶️ Labor department registration
When you hire someone, you need to start paying state unemployment compensation taxes which support people who lose their jobs.
▶️ Workers' compensation insurance
This is not required by small companies in all states, but it is in some. It provides financial compensation to employees who are injured at work.
As an employer, you’ll need to send some of your employee’s income to the IRS, as well as make Social Security and Medicare tax payments. This is best done through a payroll system.
▶️ Form W-4...
Employees fill these out to tell you about allowances they are claiming for tax purposes, so that you can withhold the correct amount of tax from their paychecks.
▶️ ...And Form I-9
Yes, another form. This one you fill in and it verifies that your employee is eligible to work in the United States. You don’t need to file it anywhere, but should keep it for three years and have it available for inspection by ICE if required.
▶️ Workplace safety measures
The Occupational Safety and Health Act requires almost all employers to keep their workplaces hazard free and train employees how to safely do their job.
▶️ Employee benefits
If you’d like to offer things like health insurance or a 401(k) plan, let your employee know how they can sign up and name their dependents.
Transitioning from sole trader to employer requires some admin on your part - but just think of all the ways your new employee is going to help you grow your business 🚀
Fincent is helping small business owners like you stay on top of their finances.