Launching a small business in Texas is an exciting endeavor. After considerable planning, you can finally open your doors and start serving your clients and running your business. Many new small businesses in Texas begin as solo enterprises, as the founding business owner gets a feel for the operation and makes sure that the foundation is strong enough before taking additional steps like hiring employees or expanding the business in any way. The transition from a solo entrepreneur to an employer requires a small business to complete a few legal steps in order to remain compliant and successful. Taking the time to properly set up your small business prevents future liability issues and legal complications, allowing you and your business to face the future with greater certainty and ease.
Whether you have been running your business on your own for a while or you are just starting to contemplate launching a new business enterprise in Texas, it’s helpful to talk through your goals and vision with a highly experienced and knowledgeable Texas small business attorney before moving forward. Together, you can identify the legal steps you need to take to protect your business and hire employees with confidence. Let’s take a closer look at some of the small business employment laws in Texas that are worth understanding as you take legal steps to hire staff in Texas so that you can enjoy a bright and exciting future. Below are just a few of the steps you can expect to complete as you move through the small business hiring checklist to grow and support your enterprise.
Step 1: Obtain an EIN and Set Up Payroll
If a business wants to hire an employee, it needs to apply for an Employer Identification Number (EIN) through the IRS. In order to legally employ staff and pay taxes, your business must have an EIN number. The IRS uses the EIN to identify the business for tax purposes. Without it, the employer will not be able to pay or withhold taxes from the new employee’s paycheck. Obtaining an EIN is a fairly straightforward process, and the IRS allows small businesses to apply for an EIN online for free. All you will need to complete the EIN application is the business entity type and the Social Security number or taxpayer ID number of the individual in charge of your business.
Step 2: Verify Employment Eligibility
Next, you will need to confirm that the candidate you intend to hire is eligible to work in the United States. You can complete this step using federal form I-9, which ensures that employees are legally authorized to work in this country. Applicants must provide key information, such as their full legal name, address, date of birth, and citizenship or immigration status, along with supporting documents. The hiring manager of the small business must review the documents personally to verify the employee’s identity and work authorization. Failing to complete this step may result in costly penalties for both the employer and the employee.
Step 3: Register With the Texas Workforce Commission
The next step of Texas employer registration is done through the Texas Workforce Commission (TWC). All small businesses in Texas who hire employees and pay them wages must register with the TWC, even if the business has only one employee in the state. The TWC keeps track of payroll taxes and unemployment insurance contributions. Your small business can register with the TWC online by setting up an account and reporting each newly hired employee to Texas’ new hire reporting program, which ensures unemployment insurance coverage. When you register, your business will be provided with a TWC account number that will be used when reporting wages and paying state unemployment tax obligations.
Step 4: Draft Employment Documents
The success of your small business relies on clear and comprehensive agreements with a candidate, preferably written contracts and documents. To ensure the best compliance with small business employment laws in Texas, be sure to draft offer letters, job descriptions, and employment contracts that clearly define the roles and responsibilities of all parties and sufficiently protect the best interests of your small business. Creating a comprehensive, detailed employee handbook also strengthens the relationship between your business and your employees, minimizing confusion and potential legal disputes in the future. When you enlist the guidance of a skilled and experienced Texas business formation attorney to help you draft clear and effective employment contracts, you can feel more secure and confident in the bright future of your business.
Step 5: Comply With Texas Wage and Labor Laws
State and federal laws require employers to post specific labor law posters in visible areas so that all employees can fully understand their legal rights. These posters address employee rights, such as minimum wage, workplace safety, anti-discrimination laws, family leave, and other protections. If you need help understanding your obligations under state and federal labor laws, reach out to a top Texas business lawyer for the trusted guidance you need to proceed with confidence.
FAQs About Hiring Employees in Texas
Do I need an employment contract for my first hire?
No, as employment is generally considered “at-will.” However, a formal offer letter and written employment agreement are highly recommended to clearly define roles and protect your Texas small business.
Do I need an attorney to start a new business in Texas?
No, but enlisting legal guidance is the best way to set your Texas small business up for a bright, compliant, and successful future.
Build Your Texas Small Business With Confidence
If your new business in Texas is ready to take on employees, you want to make sure that the steps you take are setting you up for a secure and successful future. When you enlist the guidance of a highly qualified business law attorney, you can feel confident that the best interests of your business will remain protected as your endeavor grows and expands. Reach out to Sewell Sewell Beard LLC today by calling our Prosper, Texas office at (972) 777-5390 or our Jasper, Alabama office at (205) 544-2350 to discuss your goals with a dedicated and experienced small business formation attorney.