You’re an entrepreneur. A big-picture-oriented business professional with big dreams and big plans. And since this is where your strengths and skills lie, it’s no wonder the words “human resources” seem to stop you dead in your tracks. Growth-driven business owners face a double-edged sword when it comes to expanding their operations. On the one hand, bringing on employees is a necessary part of growing a company. But at the same time, hiring these new workers adds a layer of complexity that most entrepreneurs either don’t want to deal with or don’t know how to address.
5 Vital HR Tasks You Must Complete Before Hiring
Tackling each of the following five tasks before bringing on employees will put your growing company in the best possible position for sustainable success.
- Register for an employer identification number. Depending on the type of business structure you registered initially, you may already have an employer identification number (EIN). If you don’t, you can register quickly and easily through the IRS website. Once established, this number signifies that your business is legally allowed to hire employees in the eyes of the IRS. As a side note, if this isn’t your first business – or if your current business is undergoing certain structural changes – you may be required to obtain a new EIN or multiple EINs.
- Understand tax and classification reporting requirements. Filing for your EIN is easy, but understanding your tax and classification reporting requirements may not be. Essentially, as a business owner, you’re responsible for paying federal income tax, unemployment tax, Social Security tax, Medicare and state income tax (where applicable) for all eligible employees. This requires two separate processes. First, you must determine whether the employees you’re hiring can be considered traditional employees or should be classified as independent contractors. Beyond establishing your workers’ classifications, you’ll need to put systems in place to ensure the tax payments you’re required to make for each of your workers are funneled to the right state or federal agency.
- Report new hires to your state. Yet another requirement startups will need to comply with as they bring on new workers is a provision of the Personal Responsibility and Work Opportunity Reconciliation Act, which specifies that all new hire data must be reported to the appropriate state agency within 20 days of each employee’s first day or by the first pay date following this 20-day window.
- Purchase workers’ compensation insurance. Next up, you’ll need to purchase workers’ compensation insurance to protect any employees that are injured while on the job. State requirements vary significantly regarding the purchase of this policy, and your premiums are likely to vary based on your industry, the age of your company and other factors.
- Verify candidate employment eligibility. One final requirement all business owners face when bringing on new employees is the responsibility of verifying that the people you’re hiring are eligible to work in the U.S. Typically, this is done by requiring all new hires to complete an I-9 form, which requires documented proof of citizenship or valid work visas. While you aren’t required to submit this paperwork to the government, it’s a good idea to keep it on file at your office, along with copies of the documents your new hires provided.
Certainly, none of these tasks are as fun as brainstorming new product lines or mapping out new marketing campaigns. But if you’re going to expand by bringing on new workers, they’re just as vital to your success.
Protect yourself by completing these tasks in a timely manner, and learning more about business essentials from one of our B2 HR Consultants.