You’ve been a solo entrepreneur for a number of years and things have finally taken off to a point where you’re in need of hiring some full-time help in the form of an employee. While exciting, this “next step” can also be a very nerve-wracking change.
Hiring your first employee, in fact, may feel strange. You’re finally letting someone else infiltrate the walls of your company, and you’ll have to assume the role of that person’s boss (in addition to the dozens of other titles you already hold). But before giving any individual a job offer, you need to be aware of the following:
1. Cost
If you’re only taking salary into account when hiring an employee, you’re failing to account for the myriad of other expenses (and possible expenses) that could come into play. For example, you have to pay 6.2 percent of each employee’s salary (up to $118,500) for social security tax. So, if you’re paying an employee $40,000 per year, you’re responsible for $2,600 in social security tax.
Other things to think about include Medicare tax (1.45 percent of base salary), federal unemployment tax (6 percent on the first $7,000 of wages) and, possibly, state unemployment tax.
2. Legal requirements
“When you are planning on hiring any employees, you need to understand your obligations as an employer and what you can and cannot do,” explained Consultants 500, an online platform for connecting businesses with specialized consultants.
Some things to think about include employment laws, employment contracts, tax obligations (as previously discussed), the implications of firing the employee, minimum hour and wage requirements, overtime stipulations and more.
3. Finding applicants
If you’re going to put forth the effort to hire an employee, you’ll want to make sure you’re hiring the best possible person for the job. And while you may think that will be easy,…