Hiring your first employee can feel like stepping into a whole new world, especially when taxes, worker classification and payroll feel unfamiliar.
In this episode of Small Business Smarts, we explore what new business owners need to know to stay compliant from day one.
For more information, visit ADP.com/SPARK
Video Transcript:
Erron Stark, ADP vice president and general manager, small business services
The challenge that I see most small business owners have is that they simply don't know what questions to ask as they get ready to onboard that first employee into their organization.
Victoria Jordan, founder of Pureworks Studio
This is exactly why I reached out to you.
When you reach the point in your entrepreneurial journey where you're ready to hire. One of the things you need to keep in mind is compliance. Don't let the word intimidate you. There are experts who can help. I'm going to reach out to Erron Stark at ADP. Hey, Erron.
Erron Stark
Hey, Vicky. How are you doing?
Victoria Jordan
I'm great. I've been thinking about hiring. I'm kind of almost at that point, but payroll compliance feels like a language that I am not fluent in. Where do I even start?
Erron Stark
So you're ready to hire that first worker, and you've now got to classify them? Are they a traditional W-2 employee or are they a contractor? And based on how you decide to classify them, if done incorrectly, can actually have implications to your business? That could be costly penalties down the road.
Victoria Jordan
Yeah, I don't want that.
Erron Stark
Yeah, I don't blame you. There are going to be certain tax requirements both for filing and depositing those taxes that are simply just non-negotiables. However, there are other factors that a lot of people, even when you just have one employee, don't consider. And those those could be around: I hire that first employee, and there might be certain considerations or requirements for things such as insurance or what type of benefits that I need to offer them, like a retirement plan, such as a 401 K, even if you're as small as just having that first one employee that you brought into your organization.
Victoria Jordan
So it's a lot more than just running payroll. It's about following the rules around how I pay.
Erron Stark
100% the challenges, what questions that you may not know to ask.
Victoria Jordan
Right. Which is exactly why I reached out to you. It seems like what you've said so far is the key is really classifying people correctly, paying taxes accurately, keeping really organized records, and staying on top of any changing laws.
Erron Stark
I think you said it perfectly. The only piece that I would add is if you can find the right partners and the right resources, you might be able to share some of those responsibilities or shift them completely. So that way you can go out there and focus on what you do best, which is running and growing your business.
Victoria Jordan
Thanks so much, Erron. This is so helpful. Compliance isn't just a box to check. It's what keeps my business healthy. Ease your mind and visit adp.com/small business to learn more about staying compliant from day one.
