Columbus, Ohio (PRWEB) June 21, 2012
More than 60 percent of small business owners are projecting that their sales will increase over the next six months, according to a study conducted by PNC Bank.
This prediction goes hand-in-hand with another result of the same research that, because of increasing sales, about a third of small business owners will hire at least one full-time employee over the next six months. Horizon Business Solutions, a small business accounting firm in Columbus, Ohio reports many of their customers have called seeking advice on hiring. "Of particular concern is payroll processing as companies attempt to carefully manage new growth in this cautious economy," says Kim Bolin, HBS Marketing Director.
Hiring new employees in a period of growth can affect the profitability of a business and it’s important for businesses to be prepared for the hiring process.
Bolin adds, "Adding employees, especially for the first time, is a pivotal moment in the life of a small business. It’s a big step toward growth in production and sales. Many small business owners pride themselves on the informal, family-type atmosphere they create in their workplaces. But the small business owner must approach expansion with a professional level of planning to ensure success and the continued smooth operation of the business. "
Some important considerations for entrepreneurs and small businesses owner as they enter or re-enter the market for new employees include:
(1) Decide when or if the time is right: What is the owner’s vision for the business? Is expansion in alignment with that vision or the business’ values?
(2) Decide what’s desirable in a new employee: What are the business’ needs? How might a new employee complement the owner’s skill set? Write a job description so that expectations are established from the outset. The owner should also establish a salary range that he or she is comfortable committing to.
(3) Make sure that paperwork is in order: Do employees have certification, permits or licenses that may be required? Has the business owner obtained necessary insurance such as worker’s compensation or (in some states) disability insurance for non-work related illness or injury? It will prevent future complications to have these issues resolved before bringing new people into a business.
(4) Understand the requirements of payroll taxes: New employees mean new tax obligations, including paycheck deductions for local, state and federal taxes in addition to half of the employees’ FICA (Social Security and Medicare) taxes. Business owners are also responsible for paying the other half of FICA taxes and certain other taxes such as federal and state unemployment. Business owners should be familiar enough with the law to determine who is a “taxable” employee and what kinds of compensation – for example, tips, expense reimbursements and retirement contributions – might be taxable along with wages.
(5) Think about incorporating if the business isn’t incorporated already: Adding employees means growing the business, but it also increases the business owner’s level of risk. Incorporation gives the entrepreneur a little extra protection, separating the owner’s personal assets from his or her business liabilities. In addition to the mitigation of risk, incorporation can also provide attractive tax advantages.