Starting a business comes with a huge amount of duties and obligations. Managing a workforce is one such responsibility. If you are getting ready to hire workers for your new business, know that there are a few costly mistakes new employers should avoid.
Overextending yourself and your company
Attracting new workers can be challenging for a young company and new employer. You want to make your business look good and find the right people to work for you. However, one costly mistake new employers make in this pursuit is overextending themselves and the company, for example offering benefits or bonuses the law does not require you to offer.
While you may want to offer new employees childcare assistance, wellness programs or tuition reimbursement, they can ultimately be too expensive or complicated to deliver. Instead, focus on complying with laws for mandated benefits and consider exploring additional offerings once you are more established.
Along the same lines as overextending yourself is to hire people, settle on wages, or make other financial decisions based on a miscalculation of resources.
It costs money to hire people, and this goes beyond how much you decide to pay them. You must also account for the cost of recruitment, training, and benefits, as well as determine whether you have the necessary space and equipment for the employee. Considering these factors can help you accurately assess whether you can afford to hire and retain employees.
Proceeding without proper setup
Before hiring your first employee, be sure to have a few critical pieces in place, including but not limited to:
- Obtaining your Employer Identification Number;
- Securing insurance, including workers’ compensation insurance, as Minnesota laws require all employers to provide coverage;
- Getting taxes in order, as you will need to withhold them from the employee’s paycheck;
- Reviewing your hiring practices and employment policies with an attorney; and
- Organizing and preparing documentation, including Employment Eligibility Verification Forms.
Ensuring these pieces are in place can make the hiring process easier for you and anyone you hire.