Few things are as exciting—or as scary—as hiring your first employee. Whether you’re a small business that is doubling its work force (from one employee to two employees!) or a busy professional hiring your first household employee, it’s a big step to suddenly assume the responsibility of regularly meeting a payroll.

Unfortunately, in addition to all the other issues that you now need to address—whether you can afford new employees, picking the best person for a job, and so on—you also have mounds of new paperwork to deal with.

I can’t describe all this new paperwork, but I can give you an overview of what you need to collect and prepare for the federal and state governments. If you have questions about all this, I suggest you confer with an accountant or a bookkeeper who specializes in helping small businesses prepare their payroll and payroll tax returns.

New Employer Checklist

As a new employer, you need to do the following:

1. Request and receive a Federal Tax Identification number from the IRS. To do this, fill out IRS form SS-4 (call the IRS to request one or visit the IRS web site at www.irs.gov to download one) and return it to the IRS. The IRS will send you a Federal Tax Identification number.

NOTE You can also receive a Federal Tax Identification number over the telephone. Just tell the IRS agent how you filled out the SS-4 form, and he or she will enter it into the IRS computer and give you the number. You still need to send or fax in the SS-4 form, however.

2. Obtain a copy of the Employer’s Tax Guide, commonly referred to as a Circular E, from the IRS. This pamphlet tells you how much federal income tax you need to withhold from a person’s check and what Social Security and Medicare taxes you and the employee pay. (As noted earlier, you can download this document from the IRS web site.)

3. If your state requires it, get an employer identification number from your state for filing state payroll tax returns, such as unemployment taxes, workers’ compensation, and so on.

4. If you intend to withhold state income taxes, obtain your state’s equivalent of Circular E. It tells how much state income tax to withhold from an employee’s payroll check.

5. Obtain federal and perhaps state tax deposit coupons so that you can remit federal and state tax deposits to the IRS and the equivalent state revenue agency. (Ask for these if you don’t get them automatically.)

6. At the end of the first quarter during which you employ people, obtain the appropriate federal and state quarterly payroll tax return forms. For federal payroll taxes, businesses should use the 941 form. You also probably need to file equivalent state quarterly payroll tax returns.

7. At the end of the year, obtain the appropriate federal and state annual payroll tax returns. For federal unemployment tax returns, for example, you need the 940 or the 940EZ form, and again, you probably need the equivalent state form for annual payroll tax returns.

When You Hire a New Employee

Whenever you hire a new employee, the employee must fill out a W-4 form. This form provides you with the employee’s Social Security number, filing status, and personal exemptions. You need both the filing status and the personal exemptions to determine the amount of federal income taxes to withhold, and you need the employee’s Social Security number so you can prepare a year-end W-2 statement.

You will very likely have other requirements, which are not related to income taxes, to meet. For example, you may need to verify to the Immigration and Naturalization Service (INS) that the person you’re employing either is a U.S. citizen or has a valid work permit. Be sure to check for this type of requirement. The IRS’s Employer’s Tax Guide and the equivalent state information guide can supply most of the information you need.

Renting is the best solution for many people. When you are renting there are several things that will make the whole process a better experience.

First, fully commit to the process. Renting a home, townhome or condo is a major undertaking.

However, many want to treat the process lightly. When you commit to the process you decide to take time researching, looking at apartments, and making the best decision for you.

Second, you can hire a tenant’s agent to give you professional advice and represent you. Tenant agents are bound by contract to do everything possible to protect the Tenant’s interests. A tenant should be assured of getting the best service and counseling through out the leasing process.

Third, check your credit and work to improve it. This is important because most landlords will check this information.

When you have good credit you are more likely to get the apartment you want. After all, a landlord has no other way to know how reliable you may be.

Four, choose a good neighborhood. This means choose an area that you like, but also an area that will meet both your lifestyle and financial needs.

Five, be realistic about what you need, want, and can afford. Get a place that you like and will be able to comfortably live in.

Just make sure that you are not going overboard. Choose a place that will fit the needs of you and your family without creating a stress on finances.

Six, make the right offer. Some rental properties have fixed rates while others are negotiable. Also, think about your future and how long you are likely to be in a lease or rental agreement.

Monthly rent and conditions of the lease such as security deposit, length of lease, penalties for late payment of rent, etc. are usually not too negotiable.

Seven, be flexible regarding pets. There is an obvious reason that many landlords do not allow pets. Pet owners often allow their pets to destroy or cause serious damage to the property.

The best solution to this problem is to just not have a pet. But if you must there are some rental properties that will allow you to have them although they are generally higher in price.

Eight, be pro-active about renting. Take affirmative action when it comes to your renting decisions.

This may seem to be a given to most people but it is truly amazing how many tenants think that all they have to do is sign a Tenant Representation Agreement and everything else will just fall into place.

The tenant is in charge of understanding the process and the contract. When it comes to renting the contract is a big deal.

The fact is that there are many details that only the tenant can resolve to assure a timely and trouble free move-in. They can receive counsel and assistance throughout the process but the tenant will have the best overall result by being fully aware of all aspects of the process and asking as many questions as possible along the way.

Take the time to fully understand and participate in the rental process. When you do this you will have a total understanding of the contract you are signing and be excited about the area you are moving to.