Hiring your first employee is a huge step—congratulations! It usually means your business is growing, demand is up, and you’re ready to get some much-needed help. But let’s be honest: it also brings up a lot of questions—especially when it comes to budgeting, payroll, and staying compliant.
If you’re a small business owner in Delta, CO looking to grow smart, here’s what you need to know before bringing someone on board.
1. Understand the True Cost of an Employee
It’s easy to think of wages as the only cost, but there’s more to it than that. On top of hourly pay or a salary, you’ll need to budget for:
- Payroll taxes (Social Security, Medicare, federal and state unemployment)
- Workers’ compensation insurance
- Potential benefits (even if it’s just PTO or mileage reimbursement)
- Payroll processing or bookkeeping support
A general rule of thumb is to add 15–20% on top of the base salary to get a realistic picture of the full cost of an employee.
2. Check Your Cash Flow
Before hiring, take a good look at your current cash flow. Can your business consistently cover payroll, even during slow months? Paying employees late isn’t just stressful—it’s illegal in many cases. Most states, including Colorado, have strict wage laws that require you to pay employees on time and in full. Failure to do so can lead to penalties, wage claims, and even legal action.
If you’re not sure where you stand, this is a great time to get help with your bookkeeping. Clean, up-to-date financials can give you the clarity you need to grow confidently.
3. Decide How You’ll Handle Payroll
When you’re a one-person operation, it’s easy to DIY. But payroll comes with tax filings, deadlines, and penalties if things slip through the cracks.
You’ve got three main options:
- Do it yourself (not recommended unless you’re very comfortable with tax rules)
- Use payroll software (great, but you still have to manage it)
- Work with a local payroll & bookkeeping professional who can make sure everything runs smoothly
For businesses in Delta, CO, having someone local who understands both state regulations and your industry can be a game-changer.
4. W-2 vs. 1099 Contractor: What’s the Difference?
Before you hire, it’s important to understand whether your new worker should be classified as a W-2 employee or a 1099 independent contractor—because it’s not just a personal preference or budget decision.
Many small business owners assume they can “just 1099 someone” to avoid payroll taxes or make things simpler. But in the eyes of the IRS, the classification depends on how the work is done—not what you or the worker prefer.
Here are the key differences:
| W-2 Employee | 1099 Contractor |
|---|---|
| You control how and when the work is done | They control how they complete the work |
| You provide tools, training, and a set schedule | They use their own tools, set their own hours |
| You’re responsible for withholding taxes | They handle their own taxes |
| Eligible for benefits like PTO and unemployment | Not eligible for benefits or unemployment |
If you direct the day-to-day work, set the hours, or require the work to be done a certain way, chances are they need to be classified as a W-2 employee.
Misclassifying a worker can lead to back taxes, penalties, and audits—so it’s worth getting right from the start.
👉 See the IRS guidelines on worker classification
Not sure how to classify your first hire? That’s exactly where payroll and bookkeeping help can make a big difference. We’ll help you stay compliant and avoid surprises.
5. Plan for the Transition
Hiring your first employee doesn’t just change your books—it changes your operations. Think about:
- What tasks they’ll take over
- How you’ll train them
- What success looks like in their role
- How their time will free up your time to focus on high-value work
Being proactive now can prevent costly turnover or confusion later.
Need Help Budgeting or Setting Up Payroll?
At Western Slopes Bookkeeping, we work with small business owners across Delta, CO who are growing and need clear, trustworthy financial support.
Whether you’re just starting to explore hiring or already have someone in mind, we can help you:
- Budget accurately for your first employee
- Set up payroll systems
- Understand compliance rules
- Keep your books clean and up to date
Let’s make sure your next step is a confident one.
📅 Schedule a free consultation here
📧 Or reach out anytime—let’s talk about what growth looks like for your business.
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