Navigating the Sea of Staffing Requirements

Posted by Heather Villa, CMA, MBA, MSM on October 07, 2009 in: Bookkeeping & Accounting, Business - Plain & Simple

No matter how small you may intend to keep your business, at some point you will need to consider hiring employees. And if you have employees, you’ll incur paperwork!

While you should obtain legal counsel when hiring staff – since legal requirements vary from state to state and municipality to municipality – this article provides an overview of the paperwork you’ll likely need to handle. 

Business License/Certificate: If you originally organized your business structure as a one-person operation, your current license and certificate may not be sufficient. Contact the agency where you initially filed to inquire as to whether you will need additional documentation when hiring employees.

Job Application/Identification Documents/Other Paperwork: Depending on your type of business and the area in which you live, you may be required to keep employee files. The requirements for these files may include a formal job application, copies of identifying documents, trade certificates, college degrees and any number of other documents. Even if these documents are not required in your state, they may become necessary should disputes arise. Speak with a qualified small business professional or an attorney to develop an employee records system that is accurate and contains all necessary documentation.

Business Liability Insurance: When you selected business liability insurance, you chose a policy that was right for your company at that time. However, bringing in employees often increases risk. Speak with your insurance agency to determine whether you need to raise your coverage. Also speak with an attorney about liability for your employees’ actions. For example, if an employee steals from your company? Will the insurance cover it? What if an employee steals from your customer? Will your company be liable?

Workers Compensation Insurance: Workers compensation is another important concern. If your employee is injured on the job, the company may be held responsible for his medical treatment. Be sure that you carry sufficient workers compensation insurance.

The topic of business insurance is extremely complicated. It is highly recommended that you work with an insurance agent that specializes in small businesses, as well as a qualified attorney, to ensure that you are carrying proper insurance.

Employee Taxes: From Social Security and Medicare to income tax, you may be responsible for tax withholdings from your employees’ paychecks. Tax law is specific, detailed and ever-changing. The penalties for errors may be severe. Never attempt to set up employee withholding without speaking with a qualified professional such as a CPA or tax attorney.

Obtaining Outside Help

If the tasks involved in setting up and maintaining personnel records, tax withholding and other paperwork seem daunting, you have other options. You can still “staff” your organization but you can staff it with outsource professionals who work virtually. This might include freelancers, contractors, and virtual assistants. Today’s internet makes your organization’s positions as easy to do online as they are to do in your office.

If you think that you will eventually need to hire onsite staff instead of virtual staff, outsourcing your work is a cost effective way of scaling up if you’re not yet ready to bring staff into the office. In a way, it’s the step between solopreneur and business owner/manager.

There will come a point when you need to staff up, and you might eventually have to navigate the sea of paperwork and requirements. When you do, these guidelines (along with the counsel of an accountant and attorney) will help you. And in the meantime, a cost effective intermediate step is to outsource to freelancers and virtual assistants.

About the author: Heather Villa, MBA CMA MSM, is a Business Coach and Entrepreneur. She helps business owners achieve success in operations, productivity, project management, and social media. Read her other articles at and visit for more information.

Disclaimer: © 2009 Heather Villa. Permission is granted to repost this article. Article must be published in its entirety, including author bio, and all links must remain intact.

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