Imagine the risk and pressure of starting up and running a business by yourself — no paid employees to help you.
Can’t be many of those businesses, can there? Fact is, America has over 21 million, one-person businesses according to the latest figures available from the U.S. Census.
The good news for a lot of “non-employer businesses” is that business is booming. The bad news is there’s one person working too many hours and opportunities to increase cash flow may be lost.
Perhaps it’s time to take the plunge and hire an employee. The person who wanted to be their own boss is about to become someone else’s boss. To say many challenges will follow is an understatement.
There are good sources of information on hiring employees in print and on the web. A search recommendation is “hiring your first employee.” When stepping through the maze of payroll, taxes, insurance, background checks, etc., excitement can quickly wan to overwhelming. A good first step might be to step back and ask several questions.
For instance: Is that employee absolutely necessary?
Are there considerations such as availability of space, equipment or a vehicle?
How about the all-important question: Can the business really afford an employee?
Beyond the hourly wage, there is Social Security tax, Medicare tax and unemployment tax. Added costs may include training, workman’s compensation insurance, health insurance and paid time-off.
The business owner needs to decide what level of commitment they are willing to make to an employee. If there are reservations, a local employment agency can provide employees as needed and they assume the burden of payroll taxes and withholding. In some instances a contract employee or freelancer may suffice.
A strong word of caution here is that the IRS has a very narrow definition of what a contract employee is versus a regular employee.
If the decision is reached to proceed with hiring an employee, it’s a very simple process to get the employer’s ID number, the New Mexico unemployment tax account number, and to sign up with the New Mexico New Hires Registry.
It may or may not be a simple process to find the ideal employee. Legal and accounting advice may be appropriate before hiring.
Once that new employee starts work, congratulations are in order to the one-person business that just doubled its number of employees and boosted the local economy.
Sandra Taylor-Sawyer is director of the Small Business Development Center at Clovis Community College. Call the center at 769-4136 or visit www.nmsbdc.org/clovis