The first step to starting a business is creating the business plan. Once the plan is in place, it is time to figure out the financial plan. Now that the business is up and running, the business owner can begin to bring some talented workers onboard.
Once a small business owner hires their first employee, they become an employer. Along with the title comes essential responsibilities that must be completed and maintained by the employer. Although it is the business owners hard work that brought the business to life, it is the talented team of workers who continue to help the business to succeed day in and day out.
Many of the responsibilities that employers have to their employees are codified under local, state and federal laws. Having a firm grasp on these responsibilities can help small business owners to stay out of legal conflicts and helps to foster a positive company culture. Responsibilities include:
- Paying Employees – It is the responsibility of the business owner to pay their employees. It is important to ensure that employees are being paid at least the minimum wage in the state the business operates out of. Employees are to be paid for the hours that were worked over the specified payroll period. The payment should include overtime that had been accumulated, any sick days, and/or vacation days that were taken during the payroll period. Completing payroll accurately and on time should be a top priority for the business owner. Payroll that is completed in a timely manner help employees to take care of their personal finances on time.
- Paying Employment Taxes – Employers are responsible for withholding, reporting and paying employment taxes. Failing to do so can result in hefty fines and penalties from the IRS. Taxes must be paid to the appropriate agencies. Paying the employee and employer portion of the taxes falls into the responsibilities of the employer. These tax payments include the federal income tax withholding, Social Security and Medicare totals that are due to the IRS. The Federal Insurance Contributions Act, or FICA, is another form of taxes that must be paid by the employer. FICA taxes are collected from each employee as well as by the employer.
- Reporting to Employees – Employers are also responsible for sharing additional payroll information with employees when they receive their payroll checks. This information should include a statement that shows gross pay, deductions and withholdings, net pay for the specific payroll period, and net pay for the year to date period. Each year employers are required to provide their employees with the W-2 Statement of Earnings. This document is a yearly statement of earnings, withholdings and deductions which must be provided to all employees no later than the end of January of the following year.
- Treating Employees Equally and Fairly – Treating all employees equally and fairly is critical to the success of any business. A decrease in company morale can occur if employees are treated unfairly. Generally lower morale results in less productive employees and can lead to a negative company culture. This continual downward spiral can eventually lead to higher rates of employee turnover. In extreme cases, employees who are treated unfairly may choose to file a lawsuit against the company, which can lead to expensive fees and a negative reputation for the company.
- Keeping Employees Safe – The federal government requires that employers maintain a safe work environment for all of their employees. The Occupational Safety and Health Administration (OSHA) set specific safety standards which should be closely followed by employers and members of the management team. Small business owners can find the industry specific standards that apply to their business on the OSHA website (link to www.osha.gov)
Just as employers have responsibilities to their employees, there are also responsibilities that employees have to their employers. To name a few, employees have the responsibility of:
- Honesty – Employees should be honest with their employer and avoid lying to or stealing from the employer.
- Professional – Employees are a direct representation of the business and should conduct themselves in a professional manner to reflect positively on the business.
- Confidentiality – If an employee has signed a non-disclosure agreement, they hold the responsibility of keeping private company information confidential.
- Respect – Employees should take care of the employer’s property, equipment and the business facility.
When employers and employees are aware of their responsibilities to one another, there is the potential for a positive and productive workplace. As with everything in business, it is best to have important expectations in writing for both parties. An easy place to include this information is in an employee handbook. The employee handbook is used by many employers to relay policies and procedures to their employees – allowing for the employers and employees to be on the same page. Adding a section about responsibilities up front can help set the tone and start the relationship off on a positive note.
When the thought of additional responsibilities seems like too much, outsourcing may be an option to consider. Outsourcing different functions of the business allows small business owners to focus more time on their core business, while the outsourcing company takes care of the rest.
A popular outsourcing option for small business owners is a Professional Employer Organization, also know as a PEO. This solution allows the business owner to hand-off the payroll, human resources, benefits administration and additional responsibilities to the PEO. The business owner continues to maintain the day to day operations of the business without the stress of the administrative responsibilities.
What are the benefits of working with a PEO?
Access to fortune 500 level benefits including:
- Health Insurance
- Dental Insurance
- Vision Insurance
- Life Insurance
- Flexible Spending Accounts / Health Savings Accounts
- Long Term Disability / Short Term Disability
- 401(k) Retirement Savings Plans
- Employee Wellness Program
- Employee Assistance Program
- Payroll Administration
- Human Resource Consultation
- Benefits Administration
When considering outsourcing small business needs, think local. Focus OneSource is Iowa’s only locally owned and operated Professional Employer Organization. As a small employer ourselves, we truly understand what is best for small business. Our mission is to help small businesses succeed by increasing productivity and profitability – and we work toward this goal every day with our valued clients.
Choose success for your small business and see how you could benefit from a relationship with Focus OneSource today!
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Alaina Riley
Marketing & Wellness Coordinator