Welcome to today’s business tip!
This post is for those of you that have already started your business. You’ve already gone beyond the question – should I start a business? Now that you’ve had initial success and you’re growing, have you thought about hiring help?
I’m going to share with you how to know when you need an employee, and what you need to know.
When you spend a lot of time doing tasks that are easily done, but cause you to lose money, you need to hire someone. Let’s say that you start selling supplies. You’re doing well. You list, they sell. You’re taking time out of the day to check emails, do your books, list more products, buy products on sale, etc.
You need to hire someone to take over those tasks that are taking up your time and aren’t earning you money.
In the beginning, you need to do it all. You don’t have the money to invest. Once you start doing well, you’ll see if it’s slowing your business down.
Two Options When Hiring Help
Let’s say that you need help with your business. You’re working too many hours and not getting anything done! You have two options to consider:
One option is hiring contract labor, also known as a 1099 employee, or contractor. You can do this as long as you aren’t treating them like an employee.
There are virtual assistants that can answer your emails. There are bookkeepers that can manage your books. These people would have more than one client. They may charge a flat rate or a flat hourly rate. You’re not going to pay taxes for these individuals to the state or federal government. At the end of the year, you have to send them a 1099 that shows how much you’ve paid them throughout the year.
The second option for hiring help is to hire an employee, also known as W2 earner. You are going to pay an employee as an employee. You can direct what they’re doing and you will provide supplies to help them do what they are doing. If you decide that you have to have an employee, you’ll have more control over their work. You can give them direction.
With a contractor, you can give them a project and a timeline. You do not supervise them.
Research the Laws Governing Employers
You need to read the laws governing employers. Go to the IRS website and look up the laws regarding employers, and the same thing with your state. You may need withholding numbers for both state and federal. Some cities may even have taxes. You need to set this up before you hire an employee.
You have to pay your taxes either weekly or biweekly, and you have to file returns: quarterly for federal and state, and you will need to file annual returns. Please research the laws regarding your federal, state, and local city/county. They may vary depending on location.
The government will expect you to know the laws, whether you hire someone to do it for you or you learn on your own.
You’ll need to give your employee a W2 at the end of the year. There are additional forms that have to be filled out and sent to the Social Security Administration for those items. When you pay an employee, you have to withhold federal taxes, social security and medicare, and state taxes. On social security, there are two options: employee portion and employer portion.
Using a program like QuickBooks will automate many of your forms, payments, and processes. You can hire a CPA firm to do your payroll, or use another payroll program out there.
Do your research and plan this out before you begin the employee route. While you may start your business doing everything on your own, it’s important to keep track of your business and realize when you need help.
Mostly likely, if you start and continue with your business, you’ll get to the point where you’ll need help. If you need more assistance or guidance with a business, or you’re looking for a community of other entrepreneurs in the same boat as you, make sure you check out my success path group. I have a lot of training that is already recorded, and I add new content every month.
Are You Ready?
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Have a wonderful day, and I’ll see you next week!
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