Distinguishing between employees and independent contractors may affect your bottom line or total income after expenses. Your bottom line will ultimately affect the way you withhold different taxes and help you stay compliant during the tax season. Know the good differences before hiring your first employee. Independent contractors operate under a different business name from your company and invoice the work they have done. Independent contractors can sometimes become employees in the legal sense. The Equal Employment Opportunity Commission guidelines break things down so that you can make more informed decisions. If your contractor is found to meet the legal definition of an employee, you may be required to pay taxes and fines, provide benefits, and reimburse wages under the Fair Labor Standards Act.
Your small business can provide a complete set of optional benefits to help attract and retain employees. Even if the benefits you provide are optional, if you choose to provide them, it may still be subject to certain laws. Companies that provide group your plans have to comply with federal and locale laws. You can read more about these laws in the Department of Labor’s advisory guide. Employees can expand coverage through the Affordable Care Act, and some employees may be eligible for benefits through the Comprehensive Comprehensive Budget Reconciliation Act (COBRA). Companies must extend COBRA benefits options to employees who are fired or laid off. Retirement plans are a very popular employee benefit. Consider offering employer-sponsored plans, such as 401k or pension plans. The federal government provides a wide range of resources to help small business owners choose their retirement plans and pensions.
Employee incentive programs can increase morale and create more attractiveness for vacant positions. Common incentives include stock options, flexible working hours, health plans, company memberships, and company events. If your budget allows, you may want to consider investing in benefit management software to make your accounting process easier and more efficient. Specifying these benefits in the employee handbook helps your employees make decisions, and they can use them as a reference for workplace requirements. Comply with federal and state labor laws Protecting workers’ rights and your business by complying with labor laws means that you must ensure that your business practices comply with industry regulations. This includes studying the laws that apply to groups such as veterans, foreign workers, domestic employees, child labor, and the disabled. You must also comply when firing employees, firing employees, or reducing the size of the company.