Your business is growing, and as you continue to grow you may struggle to fill multiple roles. Often, the next step is to hire employees. Bringing others into YOUR business can be both scary and hard, but it’s also very rewarding. HR professionals can provide some tools to ease the transition, but likely, the financial side of things is what has kept you from hiring sooner. How can you best prepare? We’re here with some tips for you as you take this next step.
Consider who you need to hire. What are you doing that would be better done by others? If you weren’t typing up proposals, posting on Instagram, balancing the checkbook, or counting inventory, what could you accomplish with the extra time and energy? If you’re hiring for a higher-level position, what’s the anticipated impact on growth, and how much will it cost to get there?
Do you need an employee or is it better to outsource the work? Accounting, marketing, legal advisors, and HR professionals are all examples of positions that may be worth outsourcing. However, don’t fall into the trap of calling someone a “contractor'' and not an employee. The IRS has some strict rules on this. Remember, it is your business. If someone says they want to be a contractor and not an employee, it’s not their call - it’s yours. Keeping your business out of tax and legal trouble is hard but necessary.
Here are a few tools to help ease the transition:
Save ahead of time. Set aside the money now that you need for a new computer, software, etc. Also set aside two to three months of the new employee’s pay, including any taxes or benefits. This ensures you can both afford to hire and keep them employed during the transition into their new position. It can take several months before any benefit is realized - or before you know for sure if they’re going to work out for your business.
Check with your state laws. In Tennessee, hiring a fifth person (whether full or part time) means that Workers Comp insurance is required. Other states have different requirements. Most states also require you to let them know when you’ve hired an employee (a payroll system may do this for you).
Is the employee working in another state? Likely, this means registering as a business and an employer in that state. If you sell items that are subject to sales tax, you will need to register and then start collecting in that state as well. Remember, every state has different items that are taxable, so while you may not owe sales tax in your home state, you may in another.
If you don’t use a payroll system, this is a good time to add one. There are local companies as well as online resources for running payroll. Whatever system you use, keep up with your federal, state, and local taxes. Getting behind on your payroll taxes can cost you a lot of money quickly and can get you into legal hassles as well. If you have employees in multiple states, it is wise to protect yourself by letting an expert handle your payroll.
Growing your business often means hiring people to help you grow. It can be a challenge, but if you get the right people in the right positions (and get yourself out of the positions you aren’t good at!) your business can thrive and sustain that growth for many years.
Need some help figuring out how to make the cash flow work to hire? Reach out to us!
