Now Hiring

The Paperwork

W-2s. Payroll taxes. Social Security. 401(k)s. Health insurance benefits.

Even if the latter two aren't part of your initial program, the paperwork that goes into hiring an employee can be mind-numbing. That's why the general consensus is: Have someone else do it for you. Do not go it alone.

So where do you go for help? If you're going to offer a health plan, you need to find a reputable health insurance agency to work with. But if you want to get payroll off your hands as well, Bruno suggests hiring a service such as Paychex or Automatic Data Processing (ADP) Inc., two services that can also help you with a 401(k), health benefits and just about anything else you'd need. There are plenty of other good payroll companies out there--just make sure you do your homework. You should be comfortable and confident that it's a reputable business.

What you will spend to have your checks printed and taxes taken out and everything else that goes along with payroll depends on what kind of deal you offer your employee. At first, Medley paid his payroll service about $40 per month-and that's exactly how often he paid Bankert: once a month. It made sense, because Netfor was being paid once per month. But it also saved money. The more often you pay your employees, the more benefits you offer and the more employees you have, the more expensive your payroll services will be.

But it's well worth it, says Medley, explaining that somebody he knows well got into trouble with payroll taxes. "And upon learning how badly that can go, you realize very quickly that you want someone else doing your payroll," says Medley, who adds that if your business shuts down and you still owe payroll taxes, the government will come after you-not your defunct corporation. With a payroll service--again, a reputable one--"then your liability doesn't exist," says Medley. "The risk is all theirs."

See the Benefit?

To offer benefits or not? That is the million-dollar question, especially when you're not a millionaire. Barbara Bruno of HR Search Inc. has been in the hiring business for 26 years. She says you don't have to offer that first batch of employees a health plan or a 401(k), but if you want to be one of the good guys and find good people to work for you, you should find other, cost-effective perks to offer those working at your company.

Two weeks of paid vacation is just a given. There is no national law requiring it (though some states do have such laws in place), but regardless, "You have to do that," says Bruno.

You can also offer flex hours, says Bruno, where employees can come and go as they please as long as they're working a set amount of hours per day or week. "You can also offer a casual dress code," she says. "People love to dress down and be relaxed." If you offer to pay $50 to $100 per month of an employee's day-care costs, that's a big perk because he or she will get it in pre-tax form, and you can write it off as a business expense.

And what's the biggest benefit that benefits offer your business? A happy, presumably productive, employee.

Geoff Williams has written for numerous publications, including Entrepreneur, Consumer Reports, LIFE and Entertainment Weekly. He also is the author of Living Well with Bad Credit.

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This article was originally published in the November 2002 print edition of Entrepreneur with the headline: Now Hiring.

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