How to Hire Your First Employee

First off, congratulations! You’ve made it to the point where you can’t do it all and need help.  Yay!

Now, to temper that excitement, there are a bunch of rules and regulations and insurance requirements and registrations you have to address.  Brace yourself.  We’ll try to list them in order.

  1. If you don’t have an entity, you should. Head over here to learn why and then here to learn how.
  2. If you have an entity, you should already have an EIN number, which you obtain from the IRS.
  3. Register with your state’s employment/labor department. In Nevada, this is the Employment Security Division of the Department of Employment, Training, and Rehabilitation, a mouthful we lovingly shorten to DETR (“deeter”).  You’ll need your Nevada Department of Taxation ID number, so make sure you’re registered there too.
  4. Get workers’ compensation insurance. Often, business owners can waive insurance for themselves, but you are required to carry workers’ comp insurance on all of your employees.
  5. Post required notices. Employers are required by state and federal law to conspicuously display certain bulletins where your employees can see them. If your employees work remotely, best practice is to circulate these posters and require each employee to reply with a written acknowledgement that they have received and reviewed the posters.
    1. Federal: The Department of Labor has a Poster Advisor to help determine which notices you are required to post.
    2. State:
      1. If in Nevada, the Labor Commissioner.
      2. If you’re not in Nevada, the list of offices is here.
  6. Request from your employees:
    1. Employment Eligibility Verification I-9 Form
    2. Keep this form separate from the personnel file and be prepared to present it upon request to any official from DHS or USCIS.
    3. W-4 Withholding Allowance Certificate
    4. If your state has state income tax, check here for more information on state withholdings.
  7. Set up personnel files. It’s wise to maintain, right from the start, personnel files on each employee. Remember, the I-9 is stored separately, but collecting all job applications, offers of employment, W-4 forms, disciplinary records, performance evaluations, etc. in one place will be helpful.
  8. Set up payroll. Now, as a small business working with other small businesses, we always prefer to work with small businesses.  Payroll is an exception.  While you can handle your own payroll, it is very nuanced and the rules change all the time. Keeping up with it can be a second full-time job if you let it, so we like to use one of the big payroll companies. Plus, if you screw up, you’re in big trouble. If they screw up, they take on the liability. It’s worth the peace of mind.
  9. Report each new employee (or employee rehired after a period of separation) to your state’s new hire reporting agency for the purposes of tracking down parents who owe child support.
  10. Get a CPA. This probably should have been step 1, but you definitely want to have a CPA file your IRS Form 940 each year to report your federal unemployment tax.
  11. Implement workplace safety measures. Almost every employer must comply with the rules set forth by the Occupational Safety and Health Administration (OSHA). These rules ensure employees work in a safe environment and are trained to perform their jobs safely. Sometimes your workers’ comp insurance carrier will provide OSHA training tailored to your specific business.
  12. Adopt an employee handbook. Though these handbooks are not required, they serve to outline policies for your workplace that might not belong in an employment agreement or offer letter and enable you to set minimum expectations for things like attendance, dress code, social media use, etc.
  13. EXTRA CREDIT. Employee benefits. If you’ve reached the point where you can offer your employees health insurance or a 401(k) plan, you get an A+.  You’ll want to work with your benefits providers to establish procedures for enrollment and keep those selections in the personnel files.

There are TONS of pitfalls involved in having employees – not storing your I-9 forms in a separate secure location, failing to complete it properly, asking the employee to provide specific types of verification – the list goes on.  All of these can lead to penalties and, just like people who stage car accidents, there are people who will apply for a job and then file a lawsuit for improper hiring practices.  We would highly recommend joining the Nevada Association of Employers, to take advantage of their checklists and expertise in this area.