Published on March 24th, 2015 | by Millennium Magazine Staff0
The 6 Most Important Documents for Starting a Small Business
by Sathvik Tantry
Starting your own business can be a daunting task. Even when you have your business plan nailed down, the perfect space rented, and a killer website built, taking care of the nitty-gritty details needed to make your dream a reality can feel overwhelming. After all, you’re an expert in your chosen field — you’re not an accountant, a lawyer, or an HR expert.
Wading through the legalese and verbose explanations on tax forms can be tough, but there are several key documents that you need to get familiar with to run your own company:
A W-2 is required for all of your employees. It reports wages, tips, and other compensation and includes the employee’s withheld income tax, as well as Social Security and Medicare taxes.
You must give each employee a copy of this form by January 31 of the year after the calendar year in which you paid the wages; you also must send a copy to the Social Security Administration. This document is incredibly important because it ensures that your employees have the correct Social Security amount for retirement.
If you use software to process payroll, you can usually generate W-2 forms easily. If you use the Social Security Administration’s online W-2 filing service, you can prepare and file up to 50 W-2s at one time, free of charge.
An I-9 is a federally mandated employee onboarding form that you must use to verify an employee’s identity and ensure that he or she is eligible to work in the United States.
An I-9 is not required for casual domestic services (such as babysitting), but the people your business employs must complete this form. The penalty for failing to fill one out for every employee can range from $110 per form to $16,000 for repeat offenders.
If you pay independent contractors, consultants, or freelancers, the Internal Revenue Service requires that you report the payments on a 1099 to each contractor and the IRS. It’s very important that you keep this document secure because it contains sensitive information such as the contractor’s Social Security number.
A non-disclosure agreement is a document that keeps your employees from giving away your company’s secrets. You may also want to include an invention assignment agreement to ensure that all employee creations remain the company’s property.
Non-compete agreements are a way for companies to protect their intellectual property and ensure that employees don’t jump ship to a competitor. Although it’s a good idea to get these signed, they’re not considered valid and enforceable in every state (e.g., California does not enforce them).
Job applications help source candidates for open positions in your company and specify job requirements. When creating these applications, be as specific as possible when writing job requirements to ensure that candidates know exactly what they’re getting into. These can be posted on your company’s website and online job boards such as LinkedIn, Indeed, or Simply Hired.
The Devil Is in the Details
While these documents are easy to access and relatively straightforward, you must be incredibly diligent about filling them out correctly. Pay attention to details! Any mistake in paperwork — no matter how small — could become a costly error. Do your own research or talk to a specialist to ensure you know what every field on the form means.
To avoid feeling overwhelmed by all this paperwork, think about ways you can scale workflows from the very beginning. Systemize the process online or print documents in bulk so you have them on hand instead of printing, signing, scanning, and faxing these documents every single time. Gather required information from employees at the beginning to reduce the time-consuming back-and-forth of documentation.
You can also save time and make the process much faster by creating a well-defined filing system to keep track of all documents. Whether you store forms online or use hard copies, create a labeling system, and communicate it to all relevant employees. You can even create an internal wiki or master document for employees to reference.
With a little education and organization, you won’t have to dread filling out paperwork for your small business. Once you familiarize yourself with these forms and establish scalable processes, you’ll be on track to creating a smooth onboarding process for new employees.