What to do Before Hiring Your First Employee By Charlie Vance JD, SHRM-CP, Chief Executive Officer, Erigo Employer Solutions
OFTEN TIMES BUSINESS OWNERS ARE ILL PREPARED FOR ALL OF the responsibilities that come along with being an employer. The decision to hire the first employee is arrived at after operating for months as a lean, one-man or woman shop and the business owner has become exhausted by wearing all the hats that entrepreneurs are forced to wear during a business’s infancy. However, the essential judgment of when to pull the trigger and go from an overworked business owner to an overworked employer should not be entered into hastily. There is more to consider than just what tasks can be relieved by adding an extra set of hands to your business. Be aware that becoming an employer brings additional paperwork, liabilities, expenses, training time, and legal obligations once this transition has been made. Additionally, there are several steps to be taken prior to hiring an employee to be sure your business is compliant and not subject to unnecessary liabilities. Once you have a candidate in mind, here is a non-exhaustive list of items that you will need to check off your to-do list before your new employee’s first day. OBTAIN WORKERS’ COMPENSATION INSURANCE I’ve placed this task first because, depending on which state your employee will be located in, you may have to jump through several hoops before coverage is established. I speak from experience when I say it may take some time. All Kentucky employers with one or more employees are required to carry workers’ compensation insurance through either a commercial carrier or on a self-insured basis. It is best to get the process started by contacting one of the many competent and knowledgeable insurance agents in the area.
APPLY FOR A FEDERAL EMPLOYER IDENTIFICATION NUMBER Commonly referred to as a Federal Tax Identification Number, you’ll need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). The EIN will be required when you eventually deposit taxes, file a return, or communicate with the IRS or Social Security Administration (SSA). Most businesses can submit an application online quickly and easily. Once you’ve submitted the SS-4 application, an EIN will be issued immediately during the same online session.
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NORTHERN KENTUCKY BUSINESS JOURNAL
