Unless your new business is a one-person shop, you will need to hire others to perform services for your business.

Hiring Employees

When you hire employees for your business, you must comply with a host of applicable federal and state laws and regulations.  For example, you will need to obtain a federal level Employer Identification Number (EIN) (also referred to as a Federal Tax Identification Number) and certain state level identification numbers.  You will need to complete and maintain various forms and records in connection with the hiring process, including tax withholding forms and work eligibility verification records.

Business.gov summarizes the basic steps you will need to follow in Ten Steps to Hiring Your First Employee.  The U.S. Department of Labor also maintains a useful page called the Employment Law Guide.

Employee or Independent Contractor?

A vital decision for any business, whether new or established, is making the proper determination of whether to treat a worker as an “employee” or as an “independent contractor.”  If an independent contractor is later found to be an “employee” for federal and/or state law purposes, your company may face serious financial consequences.

Please review our Employee or Independent Contractor? page for more details.

Equity Incentives

Many start-up companies use equity incentives to compensate, recruit and retain executives and employees. Equity compensation, typically in the form of restricted stock or stock options, serves to align the interests of employees and stockholders, as it incents employees to contribute to the long-term growth of a company without depleting a company’s cash resources.

Please review our summary of commonly used stock-based compensation techniques and corresponding 83(b) memorandum which summarizes the U.S. federal tax consequences of purchasing restricted stock.