Software of the Month Club 1996 May/Software of the Month Club 1996 May.iso/mac/ISO9660/ZIPFILES/SBA962.ZIP/F415.SBE

Text File | 1996-02-15 | 3.6 KB | 93 lines

@142 CHAP 01

             ┌────────────────────────────────────┐
             │EMPLOYEES -- TO HIRE OR NOT TO HIRE?│
             └────────────────────────────────────┘

In certain kinds of small businesses, you may be able to
operate in the initial stages (and perhaps even after) with-
out any employees, either doing all the necessary functions
yourself (or with the help of family members), or by con-
tracting out certain types of work to independent outside
contractors.  As long as you can get along without having
any employees, you will probably find your life is much sim-
pler.  Once you hire your first employee, you will quickly
learn that you have a great many responsibilities (legally
and otherwise), over and above the need to meet a payroll
every week or two.

Having employees imposes a host of new legal responsibili-
ties upon you, including:

  . income and social security tax withholding;

  . workers' compensation insurance requirements;

  . payment of unemployment and social security taxes;

  . OSHA safety rules and recordkeeping;

  . ERISA employee benefit rules, including a vast array

    of reporting and disclosure requirements;

  . fair employment (non-discrimination) laws;

  . immigration law requirements when hiring;

  . minimum wage and hour requirements;

  . family and medical leave requirements;

  . "COBRA" requirements of allowing former employees
    to maintain their medical insurance coverage for a
    period of time after they leave your employment;

  . labor relations laws; and

  . numerous other requirements.

(See other parts of this software program for information on
all of the above requirements.)

While politicians constantly talk about being in favor of
"...jobs, jobs, jobs...," in practice they continue to heap
more and more responsibilities, taxes and mandates onto the
backs of employers.  In fact, nearly all the incentives in
the law and the tax code are weighted heavily AGAINST hir-
ing any employees.  And since many regulatory requirements
come into play only when you have a certain number (usually
5, 10, 15, 20 or 50) employees, this writer knows certain
small business owners who are presently going to extreme
lengths to freeze the growth of their business and "cap"
their employment rosters at 14, or 19, or 49 employees, in
order to avoid massive legal fees and other costs of having
to comply with yet another set of federal or state laws and
regulations that would apply if they should hire one more
employee.

In the case of one small business owned by friends of this
writer, they have actually turned down profitable contracts
because they would have been forced to hire one or more em-
ployees to handle the increased workload, with added compli-
ance costs and headaches that were deemed to outweigh the
additional profits that could have been earned by taking on
the additional business.

In short, the legal, tax and regulatory system is telling
employers, in very clear terms, NOT to hire people, despite
the fact that politicians of every stripe endlessly proclaim
their love for more jobs, Mom and apple pie.

What does this mean to you as a potential employer?  It does
not mean that you should not hire people.  Good employees
can be worth their weight in gold, and in many cases you
won't be able to make an adequate living from your business
without hiring employees.  And the government even provides
a few tax credits for hiring in a few instances.  But do be
aware that your life is going to be much, much more compli-
cated once you take on your first employee.

Count the cost.