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What to Know Before Hiring Your First Employee

What to Know Before Hiring Your First Employee

If you’re looking to hire your first employee, you need to be congratulated! A need for more manpower means your business has reached an informal milestone of sorts. Your status suggests that as a business owner, you are thriving, and possibly ready for further growth. It is always important to start off on the right foot when seeking new help, and what follows is a look at some of the most important details to consider when taking on new employees for the first time.

State Labor Standards
The official mandate of the United States Department of Labor is made to prepare the American workforce for new and better jobs. Your state’s labor board, or the equivalent, is there to make sure that you follow all the labor laws and regulations that now apply to you. Being a new employer obligates you to a number of new mandates. Chief among these being your obligation to keep workers safe from harm and exploitation. Check to make sure you have filed the proper paperwork and are ready legally to take on more employees.

Assessing Your Manpower Needs
Your organization’s specific needs and finances will dictate how you approach hiring new people and how you determine the status of your new hires and not every business needs to create a new career. Contract labor (temporary help) is a way to get immediate access to the helping hands you need without having to get involved in the hiring and vetting process associated with recruitment. Temporary help contractors will send laborers to your location and invoice you for their hours worked. All you need to do is pay their invoice like any other bill. The advantages here are many. Contract laborers are never classified as your employees and work for, are compensated directly by the agency that sent them, and you are not responsible for any payroll functions related to the services contract workers provide. Contract labor solutions are an ideal way to complete short-term projects that require specialized skills.

Full and Part-time Workers
The U.S. Department of Labor defines part-time workers as those who work 20 hours or less per week. Full-time workers are those who log in 30 hours or more per week. States differ in terms of pay and benefits earned by part-time employees. When dealing with both full and part-time workers, your accountant can advise you as to what your obligations are under your own state’s labor laws. Look to see what options will be best for the long-run for your business.

Classification of Workers
For federal tax purposes, you must categorize your workers as independent contractors, common-law employees, statutory employees, or statutory non-employees. Misclassification of workers is a violation of federal labor laws and can result in fines and penalties.
A statutory employee is an employee by statute who is permitted under the law to report income and expenses as a business. If you have statutory employees, they are most likely to be officers of your corporation. As stated above, an independent contractor works for himself or herself and contractors are considered vendors under the law and as far as you are concerned, share a similar status. Common-law employees are workers you hire directly and have control over in terms of their every activity. Most full-time workers are common-law employees. Statutory non-employees are treated as self-employed by the IRS. This type of worker includes commission only sales reps, licensed real estate agents, and other types of workers whose compensation is based on performance.
For any kind of employee your hire, the business must make sure they are compensated accordingly. Whether you use an online payroll system or business checks, give all workers their fair pay.

Bringing on new help always entails greater expenses, detailed legal obligations, increased potential liabilities, and more administrative responsibilities. Independent industry estimates published by experts suggest the average company spends $4,000 on every new full-time worker they hire. Remaining economically competitive in your industry or your market requires getting the most productivity out of all your workers while keeping them motivated to stay with you. Giving your full attention to the above will help your organization grow faster and stay in compliance with current labor laws.

Published by Sandy

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