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Most businesses today start as
self-employment. The entrepreneur chooses the type of
business to start, develops a business plan and secures
financing. The business owner may serve as manager, marketer
and manufacturer. If the initial efforts to grow the
business are successful, hiring employees becomes a
necessity regardless of how motivated the entrepreneur may
be.
If your company grows to the point where help is needed, it
is important to understand which workers are classified as
independent contractors and which are employees. In making
these determinations for federal tax purposes, the IRS and
the courts typically look at three main categories:
behavioral control, financial control and the relationship
between parties. Factors such as instructions, training,
method of payment, employee benefits, and the workers
opportunity for profit and loss are all considered.
For more information, go to the IRS web site at
www.irs.gov
and download Publication 1779 (Independent Contractor or
Employee).
In workers compensation, the key factors to consider in
determining
whether a worker is an independent contractor or an employee
include
the right of the alleged employer to hire and fire the
worker, to direct the manner of the workers performance or,
to control the work to be completed.
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You may want to make
appointments with an accountant and an attorney who can
inform you about employer requirements on record keeping and
labor law. The nature of your business, its industry and
location must be considered.
View a list of area
accountants and
attorneys willing to assist entrepreneurs in the region.
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The process of researching employment
regulations, writing job descriptions, interviewing
candidates, and hiring employees begins the transformation
from entrepreneur to employer. Tools for managing employees
are important to limiting employee turmoil and turnover. The
most basic tools are: an organizational chart, job
descriptions, and, an employee handbook.
- The organizational chart is a diagram that shows
reporting responsibility and supervision.
- Job descriptions allow both employee and management to
understand expectations.
- A handbook helps new employees to understand their new
employer, and it helps existing employees by reducing
misunderstandings.
There are numerous regulations governing employers
responsibilities
toward employees. (Some laws apply to all employers; others
apply
after the number of employees reach a certain level.)
Developing a
handbook encourages the entrepreneur to learn basic human
resource
skills.
Software packages are available for the development of an
employee
handbook. The most thorough method of preparation would
include meeting with your attorney, accountant, and human
resource consultant.
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