Risks of hiring an employee
Financial and administrative costs
As an employer, you are responsible for certain costs of having employees. Among these are:
- Employer's portion of federal and state payroll taxes
- Unemployment compensation insurance
- Worker's compensation insurance
You are also responsible for meeting many legal requirements. You must follow the laws intended to reduce discrimination, help workers with disabilities, and protect employees from wrongful termination. In addition to meeting a wide range of legal requirements, you may find it necessary to provide some benefits to remain a competitive employer in your industry.
All of these responsibilities can add up to significant financial and administrative costs. For a dedicated, long-term employee, the costs can be worth it. For one-time, short-term projects, you're better off with a contractor or temporary employee.
If you decide to hire an employee, QuickBooks simplifies some of the administration with the Do-It-Yourself and Assisted Payroll Services.
Commitment
Hiring an employee is a significant decision. You may like someone in an interview, but later discover that they're not quite right for the job or your company. Unfortunately, terminating an employee is not as simple as just asking them to leave. As long as the employee is performing adequately, they have certain rights to continued employment (check with your lawyer). It may be difficult to terminate an employee without exposing yourself to a lawsuit.
One way to avoid a bad hire is to use a temporary employee first.
If the individual does the job well, you can then hire them as a
permanent employee. This low-commitment "try before you buy" strategy
is one of the main advantages of using staffing agencies. Click
on Temps to learn more.
Also
Your company can be held liable for an employee's actions while they're on the job. Depending on your business structure, this may expose you to personal liability as well.
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