[Hidden-tech] Employee question

[Jeff Rutherford]

Thanks Don and everyone who responded to my questions about hiring an employee.

Jeff

Jeff Rutherford
413-475-0087
jeff at jeffrutherford.com


On Jun 4, 2010, at 5:33 PM, Don Lesser wrote:

> A lot of questions. You should check with your accountant who is the final
> arbiter. Briefly:
> 
> 1. You need to do withholding and payroll. QuickBooks does a good job but
> the payroll module is $250/yr. Expensive for two employees (you pay
> yourself, right?) How do you pay yourself now? If it is owner's draw or on a
> Schedule C, you might find putting yourself on a salary and paying W2 style
> taxes to your advantage.
> 
> 2. Disability, health, etc. are optional. If you offer them to yourself, you
> need to offer them to any 20+ hour employee. You can set limits (1 yr
> service before it kicks in, pay for the person, they pay the family
> difference, you split the costs, etc.) 
> 
> 3. SEP-IRA I believe is the same as other benefits. You have to pay the same
> percentage to the emp's IRA account as you do yours. You can set a vesting
> period. There are other rules. Check Vanguard or Fidelity .com for info on
> the rules.
> 
> 4. You can get a lot on-line, but your accountant is the one who you should
> listen to. Are you a  Corp, LLC, sole proprietorship? Acct can tell you the
> benefits and costs to each.
> 
> 5. I believe you will have to get workman's comp insurance. Most consultants
> are required to but few seem to. With an employee, your exposure is greater
> and the last thing you want is the Feds or State taking an interest in your
> company.
> 
> 6. You'll have to pay withholding taxes and 1/2 FICA and Social Security for
> the employee, probably on a monthly basis. Once you get the schedule down,
> you're OK, but keep in mind that monthly taxes add up quickly. The taxes,
> penalties and 18% interest can add up faster than you can say vig. 
> 
> 7. Hiring consultants (1099) employees is convenient, but remember that the
> IRS and the State have complicated rules about what is and is not an
> employee and that if they decide you have misclassified an employee as a
> consultant, they can assess triple penalties. Consultants always want to be
> consultants, but as an employer, you see things in a different light. Here
> is where your accountant will probably err on the side of employee and your
> employee will err on the side of consultant. It is a b*tch, but make sure
> you understand what you are getting into.
> 
> I consider myself fairly liberal, but I begin to get crazy when I deal with
> gov't agencies and rules. And, there is a whole other set of advice about
> hiring, training, managing, firing employees. Suffice to say, don't hire
> your friends and relatives, remember the difference between an employee and
> a friend and that a friendly relationship is not the same as a friendship,
> remember that the employee does not see your business the same way you do.
> Employees are not entrepreneurial--that's why they are employees and not
> business owners. Similar to the difference between a parent and a
> friend--not that you need to be paternal to your employees but you need to
> maintain some distance. Manage by talking and address issues directly. We
> all want to avoid conflict, but I try to think of myself as a scientist in
> these situations: this is the observed data, this is the suggested solution.
> You want to maintain empathy and discuss options, but when you finally have
> to say, "This is wrong. Don't do this." or "There are several approaches,
> this is the one I want to take," it helps to be dispassionate and not get
> into personalities.
> 
> I don't mean to sound negative about all of this. It is just that you need
> to approach the situation carefully and deliberately and be informed.
> 
> On the other hand, when you and your staff complete something that is bigger
> and better than you could do alone, it is a great feeling. It is also a good
> feeling to know that you are helping to feed other families. A
> responsibility, but satisfying as well. And when you hire someone who can do
> things that you cannot or who simply frees you up to do what you do best, it
> is also liberating.  
> 
> Long-winded answer to a large question. I have been in business for nearly
> 30 years with employees for most of them. I have made every mistake at least
> twice. 
> 
> Don Lesser
> Pioneer Training, Inc.
> 139B Damon Road, Ste 2
> Northampton, MA 01060
> (413) 387-1040
> (413) 586-0545 (fax)
> dlesser at ptraining.com
> www.ptraining.com
> 
> 
> -----Original Message-----
> From: hidden-discuss-bounces at lists.hidden-tech.net
> [mailto:hidden-discuss-bounces at lists.hidden-tech.net] On Behalf Of Jeff
> Rutherford
> Sent: Friday, June 04, 2010 1:33 PM
> To: Hidden-Tech Tech
> Subject: [Hidden-tech] Employee question
> 
>   ** Be sure to fill out the survey/skills inventory in the member's area.
>   ** If you did, we all thank you.
> 
> 
> I'm considering hiring my first employee, but I have several questions and I
> wonder where I can find this info.
> 
> What do I need to do re: withholding and other payroll taxes? Do I need
> disability insurance even though this person will be working remotely - from
> their own apartment/house?
> 
> I have a SEP-IRA. By law, do I need to offer this employee a 401-K or
> something similar? Also, what's the regulations re: providing health
> insurance, etc?
> 
> Anyone know where I can turn to get answers to these various questions or
> should I just ask my accountant all these questions?
> 
> Jeff
> 
> 
> Jeff Rutherford
> 413-475-0087
> jeff at jeffrutherford.com
> 
> 
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