Guide to Starting and Operating a Small Business | 2018 Guide to Starting and Operating a Small Business - Page 35

7 Hiring Employees Employees add another layer of complexity to your business that requires careful consideration and planning. It is important to hire the right people, train them well, keep them happy so they will stay, and be aware of taxes and legal requirements. Plan Your Hiring Hiring and managing employees requires good record keeping systems; all the necessary paperwork completed; all regulatory requirements met; and a formal training plan to assure consistency and quality in performance. • Prepare a written job description that indicates exactly what is expected of each employee. • Develop at least a simple employment handbook that outlines the mission and vision of the business; employment policies such as work periods, time-keeping, holidays, etc.; and establish standards of employment. There are many resources available that provide framework for developing an employment handbook that meets state and federal legal compliance. • A résumé is a good way to get a first impression of a candidate. From there, selected candidates should complete an application form and an interview. Ask each candidate for the same position the same questions and document the interview. There are many good sample sets of interview questions and application forms on the internet. Depending on the skill required for the position, many employers consider attitude of potential employees as the number one trait in their hiring decision. • It can also be helpful to have a stated 30- or 90-day introductory period during which employer and employee can evaluate skills and compatibility with the organization and the position. Be sure to have a written declaration (handbook, application form, or otherwise) that employment is “at will” meaning the employer or employee may terminate the employment relationship at any time with or without cause or prior notice. One place to start looking for your next great hire in Michigan, go to: www.mitalent.org/employer The U.S. Small Business Administration’s (SBA) provides a wealth of online resources for hiring at: www.sba.gov/starting-business/hire-retain-employees/hire-your-first-employee Employee Vs. Contractor (Contract Labor) Hiring outside contractors or temporary help is also an option. Individuals may provide services to a business as either an employee or a contractor. The status as an employee or contractor affects the taxes, liability, benefit costs and many other areas of a business but it’s important to understand the IRS requirements regarding employment status as contractor vs. employee. The question of “employee vs. contractor” is a critical issue and does not have a simple answer. If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes and penalties. There are many different tests the IRS may apply to determine whether an individual is an employee or contractor. If you are considering using contractors instead of employees for your business, it is important that you consult with a competent tax advisor prior to making a decision. See Appendix A for more information on employee vs. contractor. Training and Working with Employees Training employees is extremely important. You want well-qualified employees who properly and consistently represent your business, add value to your brand and image, maintain the quality you expect, and build customer good will. A well-defined company policy handbook plus job descriptions that outline duties, responsibilities, ethical 33