Here we will guide hot to Hire new employees and how to process the Payroll
of the Employees. Hiring and managing employees are important steps in your company's
growth. Whether you've decided to hire yourself as an employee of your
firm or LLC, or if you simply need to add people to your growing
business, we can help. We've broken this section down into 2 major parts:
Hiring New Employees
Processing Payroll of Employees
Hiring New Employees
The first thing you should do before hiring an employee or employees is to know
exactly why you need them. Many business owners simply become overwhelmed and
need to hire an employee to handle the overload. The better approach, as we've
outlined in detail in our
Automate Your Business section, is to imagine your business in 1 to 3 years
and create an organizational chart, job titles and job descriptions to match
your vision. Then, you can slowly "fill-out" your organizational chart with
employees until your company reaches operating perfection!
The following steps are helpful:
New Offered Job Description
This organizational chart approach requires you to create a detailed job
description for each position in your company that includes:
- an overview of the position and responsibilities
- who is responsible for supervision of that position
- what is required on a daily, weekly, monthly and even quarterly or
- what constitutes successfully doing the job (job goals)
- exact procedures for doing the job (please see our section on the
Manual for more information on automating processes and procedures.)
Legal Requirements for New Hiring
There are numerous Federal, State and Local rules regarding hiring employees,
and most large companies maintain in-house legal counsel and human resource
departments to deal with these rules. But, if you are a small company, these are
unaffordable luxuries. Therefore, here are some simple common-sense guidelines
for hiring employees:
- Do not discriminate based on race, color,
gender, religion, handicap status, etc.
- Respect the applicant's right to privacy:
marital situation, economic background, personal
- Don't imply things you can't deliver: job
security, benefits, etc.
- Observe all laws relating to
minimum wage, hiring young or immigrant workers.
- Follow the IRS
guidelines for hiring independent contractors.
- Follow all IRS and State new hiring requirements
LLC clients receive access to a detailed, state-specific checklist
that includes links to state-specific forms and applications as well as
specific information on hiring employees and doing business in
Before Hiring new Employee
Before hiring an employee you must do the following:
- Obtain a Federal Employer Identification Number (FEIN)
- Register with your State Labor or Employer Division
- Obtain Worker's Compensation Insurance (if required)
- Post an "Employee Poster" as required by Federal and most State
After Hiring the new Employee
The following forms must be filed for every new employee:
- Federal W-4 Form
- Federal I-9 Form (verifies the legal status of
- State New Hire Reporting Form
These forms and any other employee paperwork must be kept by the employer in
an "employee file" for at least 4 years.
Processing Employees Payroll
Okay, so you've hired the employee, registered with the appropriate agencies,
obtained the necessary ID #'s and complied with the necessary regulations. The
next step is processing payroll.
There are basically 3 things you need to know:
1. How much you are paying your employees.
2. How much you need to take out of each paycheck for the various Federal, State
and Local Taxes.
3. A running total of how much you've paid your employees, how much has been
taken out and for which reason (i.e. how much was for social security taxes, how
much for state unemployment, etc.).
This is important because you will need to know these totals to file
quarterly tax forms. Most accounting software can tabulate these totals
So here's the overall process:
- Pay your employee's (either weekly, bi-weekly, bi-monthly or however).
- Withhold the proper amount from each paycheck, keep track of the totals
either with accounting software or manually.
- Deposit the total Federal Taxes (Income, Social Security and Medicare)
owed monthly to the IRS.
- If applicable, deposit income or other State taxes to your State's
taxing authority (this could be bi-weekly, monthly or quarterly).
- Quarterly file IRS Form 941 summarizing what you have deposited
monthly for the previous quarter. Yearly file the IRS Form 940.
- Quarterly (or bi-weekly or monthly depending on the State), file the
necessary state forms summarizing what you've deducted and deposited from
Are You Confused About Payroll Yet?
You should be. The government has taken a relatively simple process and made
it positively complex. However, there is a solution that we recommend for every
small business. In fact, this service alone is one of our most highly