I once had a boss that often said, “Working would be easy if we didn’t have to deal with people.”
Regardless of what you are selling – whether services or widgets – you have to deal with someone: a colleague, a customer, tech help, or marketing support. People make our businesses successful. And, sometimes, people also make running our businesses difficult.
No one sets out to be a company with a toxic workplace. But we’ve all heard horror stories: the ongoing workplace sexual harassment issues, lawsuits over wrongful termination, prejudice and favoritism between managers and employees, employee theft, and more. Perhaps you’ve even worked in a toxic workplace at some point in your career.
From swiping post-its to inappropriate behavior, your business needs help mitigating risk through hiring best practices before the first employee has been onboarded. Missing a few simple steps from the beginning can slowly degrade your business, becoming the setting of those horror stories that leave us asking, “How did they get here?” The answer: they didn’t set up the proper structures and resources when hiring their first employee, leaving the red flags flying high with no one to notice until it was too late.
As a Fractional CFO, I can provide you with a detailed, expert look at your business processes to notice these red flags and help you mitigate risk early in the process, saving you time, money, legal fees, and most importantly, the reputation of your business. Set up a consultation today!
Mitigating Risk Through Hiring Best Practices: 6 Expert Tips
Here are 6 steps you can take when hiring your first employee to mitigate risk and protect your business.
Already have a slew of employees? Not to worry! You can implement these practices now and start fresh at any time. It’s never too late to protect your business.
- Create An Employee Handbook. An employee handbook provides everyone who works for your company with an overview of all policies and properly sets expectations for things like leave, vacation days, payday frequency, anti-harassment policies, health/dental benefits, dress-code, code of conduct, etc. If there is an issue, you’ll have the handbook to provide accountability during difficult situations. Consulting with an HR specialist is a great way to ensure you don’t miss something important. (Need a referral? I am happy to connect you to my network of experts! Contact me today.)
- Obtain Worker’s Compensation Insurance. Many business owner’s don’t think they need this until it’s too late. Consider this: your business could be liable for an accident of any kind that happens to your employee. If an employee slips and falls in your parking lot, falls in the warehouse or off a ladder, is in a car accident running errands – any kind of injury situation where an employee was “on the clock” – could cause a lawsuit or claim against your business. Trust me, you want this BEFORE you hire anyone. This can be done through your state or through a separate insurance carrier.
- Set Proper Job Titles. Ensure the title you choose for your employees matches the work to be performed. This is a benefit to both you and the employee. Too many times, I’ve talked with business owners who hire someone for bookkeeping tasks but their title is “Director of Finance.” That job title requires a pay rate much more than what is appropriate for the responsibilities. If that employee ever moves on, they may have unreasonable expectations for what they are qualified for and what they should be paid.
- Establish Company Culture. Take time to think through and document what type of company culture you want to grow. Putting the culture you want into words will help you achieve it. When you begin interviewing, scout for skills, personality, and culture fit that meet your expectations for your company. Then cultivate the company culture you want from your first employee.
- Find and set up with a payroll software. This cloud-based software is inexpensive, saves loads of time, and eliminates human error, protecting your business from pay-related issues. Simple, quick, and mitigates risk!
- Have Employee Hiring Documents At The Ready. Make sure your employee hiring documents are in order so that you are not scrambling at tax time, which increases the risk of errors and missing information.
- Ensure each employee completes an I-9 and a W-4 tax form. The I-9 is for your records only and will be used in the case of an audit. The W-4 is needed to process your first payroll.
- Ensure your employee completes any documentation with the payroll service provider you chose so they are set up properly from the first paycheck.
- Your company likely has to register for business in each state your employees are located in, which means there are various forms that are dependent on your situation. This applies to many more businesses since the pandemic caused a lot of businesses to have a remote workforce. These documents may include: state income tax withholding number, other local tax registration numbers, potential income tax forms for company, etc.
Mitigating risk through hiring best practices will save yourself from getting sued or having a big penalty from a government agency. Not implementing these basic steps from the beginning could cost you a lot of money in legal fees or with the IRS. Huxley CPA is available to help you not only implement these basic safeguards, but also look for other red flags to protect your business. Set up a consultation today!
Want even more tips for setting up your business? The Huxley CPA blog has a plethora of resources, tips, and best practices for you to consult at your leisure.
