HR Basics: 4 Things You Need to Know

Human resources (HR) is one of the most complicated aspects of running a business. It’s also one of the most important because salaries and benefits make up a large portion of your operating expenses.

HR deals with things related to your personnel, including:

• hiring and onboarding
• performance reviews
• development and training
• motivation
• safety and wellness
• benefits
• communication between staff and management
• staying up-to-date with federal and state employment regulations

As a small business owner, you’re likely performing these duties on top of establishing and growing your company. If you have fewer than 50 employees, focus on these four basics aspects of HR.

1. Employee files

When you hire your first person, you should start the practice of keeping three separate records for your team:

1. I-9 file: Form I-9 verifies an employee’s eligibility to work in the United States. You’re not required to file these forms with the federal government but are expected to produce them if requested. Keep all of your staff’s I-9 documentation in one file, so they’re readily available if needed.
2. Personnel file: In each worker’s personnel file, keep their emergency contact details, resume, performance reviews and evaluations, documentation of disciplinary action, training verification, W-4 information, and payroll details.
3. Medical file: These files will contain notes from workers’ doctors, disability information, and any other important medical information. Because these files contain private and confidential material, keep them in a locked and secure area, separate from your other records.

2. Employee handbook

Your handbook tells your staff what you expect from them, what they can expect from you, and protects you if there’s a dispute. Make sure each team member receives a copy, reads it, and signs a statement that they’ve understood the handbook. Learn more about writing your first employee handbook.

3. Required posters

As an employer, you’re required to display certain notices in an easily accessible place. These notices are mandated by various federal and state agencies and let your staff know about their rights as a worker. They may also tell your team what your responsibilities are as an employer.

4. Payroll

When you hire your first employee, you’re required to meet specific payroll and tax obligations:

• You must pay your team at regular intervals. In other words, you can’t pay your workers weekly one month then switch to biweekly the next.
• You’re required to keep accurate records of hours worked and wages paid.
• You must pay your employees at least minimum wage.
• Unless a staff member is exempt from overtime, you’re required to pay them at least time and a half their hourly rate for all hours worked over 40 in a workweek.
• You must withhold taxes from each paycheck, including income taxes and Social Security and Medicare taxes.
• You’re required to remit those taxes to the IRS and state governments and file the necessary payroll tax forms, such as Form 941.
• You must provide your employees with a W-2 each year by January 31.