How to Hire Your First Employee

Updated: Nov 18, 2019


Has your workload finally surpassed all that you can do on your own and it is finally time to hire your first employee? First, congratulations, business growth is always an exciting thing! Second, hiring a new employee also comes with a lot of legal responsibility, so you are going to want to get this right to avoid penalties and fines.


Step 1: Figure out what you need exactly

Start by analyzing how much help you need, what tasks you need completed, and the amount of work that will need to be complete. Determine how much you can afford to pay this employee as well. Also make sure that you understand the difference between employees and independent contractors.


Step 2: Search for good talent

We can’t help you find the good talent, but we can tell you that expenses you make to search for a potential employee is deductible. Go ahead and upload a hiring ad (or job posting) on LinkedIn or Indeed. Just make sure to save the receipt to keep track of hiring expenses. Then, hire the person that will be the best fit for the business model that you have and will help you achieve your future business goals.


Step 3: Begin the Hiring Process

To hire on a new employee there are several required things that you need to complete. We can tell you what needs to be done but you could also alleviate additional stress, tasks, and time by outsourcing HR and payroll responsibilities to a trusted accounting/payroll firm.


What You Need to Hire an Employee:

  1. A Federal EIN -Before this you might have been able to get away with being a sole-proprietor and letting income pass through to you personally, but paying an employee comes with several other responsibilities, like collecting and remitting their payroll taxes and local state taxes (more in depth steps for starting up a new business are in this blog)

  2. State or Local Tax IDs

  3. Develop a payroll schedule

  4. Have qualifying employee complete form W4 & form I-9

  5. Decide who will administer payroll responsibilities, whether a business or yourself personally

  6. Keep Employee records on file

  7. Pay Federal and State Payroll Taxes in a timely manner

  8. Make sure to follow all New Hire requirements based on your state

  9. Obtain Workers’ Compensation Insurance – The requirement for this also varies by state, so find out exactly what is required of you by talking to either an insurance provider or an accountant

  10. Submit federal and state W-3’s at end of year and send all employees W-2s.

  11. File form 940, 941, or 944 (to find out what form you should file read this IRS link https://www.irs.gov/charities-non-profits/forms-941-944-940-w-2-and-w-3 or consult with your local attorney or accountant.)


Step 4: Make sure Goals and Expectations are clearly explained

In order to make sure you are getting exactly what you hired someone for completed, make sure you express to your new hires what is expected of them.


Do not let all the requirements and things needed from Step 3 discourage you from hiring help for your new business! There are plenty of qualified professionals who would be more than happy to help you. And don’t forget there are many, many small businesses out there who have gone through this before and so can you! If you need help setting up your business to take on the responsibility of new employees or you want a professional to handle it all for you, contact Obregon & Associates today. We can be easily reached by calling us at 618-281-9700 or 417-833-8811, or by email at info@obregonandassociates.com. We would love to help your business grow and achieve its goals.

Sources: https://www.nolo.com/legal-encyclopedia/hiring-first-employee-13-things-29463.html, https://www.sba.gov/business-guide/manage-your-business/hire-manage-employees

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