celebrity apprentice reports: 4 Ways to Avoid Hiring Your First Employee

Tuesday, 10 April 2012

4 Ways to Avoid Hiring Your First Employee

It happens to every moderately successful entrepreneur or startup. At some point in your growth trajectory you realize you can't go it alone anymore. To get to the next step, you need help. But the transition from a one-person-show to actually hiring your first "real" employee runs you smack into an overwhelming number of rules, regulations and taxes - and lots of other ways to mess things up.

No worries. There are ways to get help - without actually having to commit to hiring "real" employees.

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These four approaches can help put off that day when you enter the realm of being an actual boss. At least for a while.

1. Hire interns. Interns come with a healthy number of positives and negatives. On the plus side, you get fresh, young talent who approach your business with an open mind and new perspective - for minimal cost. Offering internships is also an effective way to build a "farm team," a way to try people out before you offer them full-time positions.

The down side? You may have to do a lot of training, educating and handholding.

Before you go this route, check your state's employment laws. Some states require interns to be paid. Colleges and universities may have formal internship programs, but they're often accompanied by numerous regulations and a lot of paperwork.

2. Hire independent contractors. This may sound like an easy solution, but it's actually fraught with danger. Too often entrepreneurs (who operate without the benefit of HR staff) misclassify employees as independent contractors--and the IRS loves to catch the offenders. This happens so often the IRS offers a special page with helpful hints on how to classify workers.

In a nutshell, using independent contractors gives you the right to control or direct the result of the work, but not how the work gets done. Meaning you can't set their hours, make them come into your offices, etc. Is that clear? Probably not, so make sure you get good legal advice before heading down this road.

3. Hire part-timers. Since they work fewer hours, part-timers cost you less. But you may not know that part-time employees are subject to most of the same rules and regulations (and depending on where you live, some may be entitled to company benefits) as full-time employees. The number of hours worked denoting part-time status varies by state. Check with your state's department of labor to make sure you're in compliance. And yes, minimum wage rules apply.

4. Barter services. Exchanging services with another business is a great way to get work done without having to hire someone, or spend any money. For instance, you could trade x dollars of your Web coding services with a marketing company in exchange for the equivalent amount of marketing services. One caution here - our friends at the IRS consider bartering taxable income, so you'll have to note the exchange when you file your taxes. The IRS also has a handy page on bartering's tax implications.

In the long run, of course, having to hire actual employees is a good thing. It means your company is growing and it provides the new jobs our economy needs. Just be sure you really need a full-time employee before you take the big step.

Photo courtesy of shutterstock.com.

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