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4. Register for Workers' Comp

In just about every state, you'll need to maintain workers' comp insurance on each of your employees in the minimum amounts required by your state law. In addition, most states require your business to pay into an unemployment insurance program that provides a minimum weekly income to downsized or laid-off workers until they can find a new job. Four states (Hawaii, New Jersey, New York and Rhode Island) and Puerto Rico also require your business to pay into a temporary disability insurance program that provides disability coverage for workers who are between jobs. Some payroll services sign you up for these, but many don't. If your payroll service doesn't, your accountant or employment attorney should be able to do the paperwork.

5. Get a Poster. When it comes to employee rights, federal, state and local laws are all over the place. For example, some states prohibit you from discriminating against employment candidates based on their sexual orientation, but others don't. Even in the same state, the rules will vary depending on the type of business you're engaged in, the number of employees you have and other factors.

It isn't enough for you to know your employees' legal rights; you must go a step further and notify your employees of their rights in the workplace. To order a poster that spells out all the federal, state and local requirements for your business and number of employees, go to, click on "labor law compliance," then "poster guard compliance protection," or go to When the poster arrives, read it and then post it in a prominent place (such as your lunchroom) where employees are certain to see it. If your employees work at remote locations, make copies of the poster, mail it to each of them, and make sure you get a delivery receipt.

6. Prepare an Employee Manual. Once you have three or more employees, consider drafting an employee manual that spells out your policies. An attorney will do this for you for a $1,000 to $1,500 fee. Do not copy another employer's manual--your business may have different needs. Call a meeting of your employees and walk them through the manual; have your employment attorney present to answer questions. Give a copy to each employee, and have them sign a receipt saying they have read and understood it.

7. Consider homebased workers. Whenever an employee works from home, your business legally has an "office" there. So if one of your employees lives in another state and uses her home address on business cards, correspondence and so on, you may be required to register your business as a "foreign" entity in that state and pay income, sales and other business taxes to that state's government.

8. Find a Good Employment Attorney. Once you have employees, you need a lawyer who specializes in labor and employment law matters. For a list of qualified local attorneys, call your local bar association, or go to and search by ZIP code (select "employment law" as the legal issue when prompted).

Cliff Ennico is a syndicated columnist, author and host of the PBS television series Money Hunt. His latest books are Small Business Survival Guide and The eBay Seller's Tax and Legal Answer Book. This article is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.

Cliff Ennico is a syndicated columnist and author of several books on small business, including Small Business Survival Guide and The eBay Business Answer Book. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.

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