Most employers believe that hiring an employee will give them extra time to focus on generating new clients, developing product lines and growing the business, but Robert W. Wendover, author of Smart Hiring: The Complete Guide to Finding and Hiring the Best Employees, says the opposite may be true. "Having an employee actually takes time away from your work," he says. "In addition to your regular job, you have added a management role. There are things that need to be done, like day-to-day supervision, answering questions and payroll, that were never issues before."
Minssieux knew there would be extra paperwork involved in hiring employees, so prior to bringing staff into his homebased business, he researched his options for payroll and benefits services. Though he pays close attention to his bottom line, Minssieux believes it is often more cost-effective to outsource certain tasks. "We decided to have a third party handle our payroll," he says. "We could do it ourselves, but it is much cheaper to outsource."
TimingCube also offers its employees benefits, which Minssieux researched thoroughly. "I talked to my accountant and weighed the options and decided the Simplified Employee Plan IRA was the easiest plan to set up because there is very little paperwork," he says. "The plan was set up through a brokerage firm, and all I have to do is write a check."
Minssieux knew it would be difficult to find an affordable benefits plan with only four employees but was determined to find a way to cover benefits for his staff. "I decided to let the employees choose their own [individual] plans, and I pay for them," he says. This nontraditional approach has allowed the company to provide health insurance to its employees at a much more affordable price.
Obeying the Law
Hiring an employee is an extremely important step, and it's essential to make sure everything is done legally. Experts suggest following several key steps before hiring an employee to work in a homebased business.
"First, make sure the employee is qualified to work in the United States," Cunningham warns. "Ask them to provide copies of their [immigration documentation] and their Social Security card [to verify their eligibility]."
Additionally, homebased business owners should also check with their insurance agencies to ensure they are covered to have employees working in their homes. "In some cases, depending on the state and the number of employees, a homebased business owner has to purchase workers' compensation insurance or change [his or her] insurance policy to have employees working in [his or her] home," Cunningham says. "Call your insurance agent to find out what coverage you need."
Cunningham also advises employers to check local laws pertaining to hiring employees in a homebased business. "In a lot of cities, it is not legal to have an employee in your home," she says. "Homebased business owners have to check with the city before bringing someone in to work in their homes."
Cohen-Fyffe checked to ensure that there were no zoning laws restricting her from hiring employees to work in her homebased business-and then she talked with her neighbors to ensure they felt comfortable with the additional traffic that her business generated. "I felt it was common courtesy to let my neighbors know about my business," she says. "I wanted them to feel comfortable coming to me if they had any concerns."
The laws pertaining to minimum wage, benefits and insurance apply to almost any type of business, including homebased businesses. Cunningham suggests visiting your state's Department of Labor office to get a copy of your state's employment laws: "In reality, except for some oddities that exist in a homebased business," says Cunningham, "you are still hiring an employee and you still have to follow all the basic rules."