Many businesses can grow as a single party entity or partnership with the help of contracted labor, but some require full time employee help. If you have decided it is time to hire an employee to assist you in your business, there are a few regulatory items that you must be sure to follow. Below are the necessary tasks to ensure you are in compliance with federal and state regulations. You will want to check with your local city and county governments to be sure there are no additional steps you must follow.
Apply for an EIN
The EIN is a mandatory filing that allows you to report taxes and other documents to the IRS regarding your employees. The EIN is an Employer Identification Number, which you obtain when filing the Federal Tax Form SS-4. It is also commonly called the Employer Tax ID. You must also use the EN when reporting to state agencies.
Understand Your Legal Limitations
There are legal standards that you must apply when hiring employees. For example, when hiring employees you should be aware of a set of questions that are illegal. These questions may bring up issues of personal bias and discrimination, and are outlawed in the United States. In addition you should understand the number of hours you can ask your employees to work without being paid overtime, and how long a legal lunch break will be under the law. These policies can be found at the federal and state level Department of Labor offices.
Develop Your Employee Handbook
After understanding all of the regulations, you will want to develop your employee handbook. This handbook should clearly explain the basic personnel policies, benefits, paid time off and vacation days.
At a minimum, the simplest set of policies will outline:
- The number of vacation days that can be earned each year, and the method of accumulation. You may also want to include the policy here for roll-over days into future calendar years. If there is an increase of vacation days after a number of years of service, this can be outlined as well.
- The number of gratis days off due to illness, and the method of accumulation.
- Partial day off policy. This partial day policy can be applied to sick days and/or vacation days.
- Paid holidays for the calendar year.
- Notification policy for using sick days and vacation days.
Additional items you can include are:
- Standard working hours (starting time and ending time).
- Flexible time and overtime policies.
- Benefits offered, including medical, dental, vision, disability and life insurance.
- Retirement plans and pensions.
- Ongoing training and education requirements or options.
- Performance reviews process, including frequency and basis of evaluation.
The employee handbook will provide a sense of equality and security for those individuals that are hired into your company, and the EIN will ensure you have covered the proper baseline registration. Understanding the specific legalities of your business and your locality will point you towards any additional specific expectations. Once these items are completed, you will be well on your way to hiring your first employee.