STEPS TO HIRING EMPLOYEES

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Employers: Steps to hiring employees

Once your business starts to grow you will need help in making sure you manage all aspects of it. The worse thing to encounter as a client is a disorganized business. In order for everything to function and fall in its proper place; you must organize yourself and your business. Sometimes this means hiring an extra set of hands.  When hiring employees you must keep in mind that there are Federal and State regulations that must be followed.  Your business should always remain in compliance with these regulations in order to avoid costly penalties.

Here is a quick list of some of the things you will need to know.

1. Obtain an Employer Identification Number (EIN); Employer Tax ID provided by the Internal Revenue Service.  Before requesting your Employer Identification Number, you must already have determined what type of legal structure you are establishing (Sole Proprietor, Partnership, Corporations, Limited Liability Company, Estate or Trust)

You can:
          – Call 1-800-829-4933
          – Apply Online

2. Set up your system for record keeping. According to the IRS you must keep at least 4 years of employment tax records after filing your 4th quarter for the year. The IRS may audit these.

You should have the following readily available:
         – Your employer identification number.
         – Amounts and dates of all wage, annuity, and pension payments.
         – Amounts of tips reported.The fair market value of in-kind wages paid.
         – Names, addresses, social security numbers, and occupations of employees and recipients.
         – Any employee copies of Form W-2 that were returned to you as undeliverable.
         – Dates of employment.
         – Periods for which employees and recipients were paid while absent due to sickness or injury (amount & weekly rate of payments you or 3rd party payers made)
         – Copies of employees’ and recipients’ income tax withholding allowance certificates (Forms W-4, W-4P, W-4S, and W-4V).
         – Dates and amounts of tax deposits you made.
         – Copies of returns filed.
         – Records of allocated tips.
         – Records of fringe benefits provided, including substantiation.

3. Keep the latest IRS forms available.

Some of the forms you will need are:
Form I-9: Federal law requires employers to verify an employee’s eligibility to work in the United States. Employers must carefully examine all acceptable documentation provided to confirm the employee’s citizenship or eligibility to work in the United States. Be sure not to ask for any identification that isn’t listed on the I-9. Employers that request any other type of Identification may be at risk of a discrimination lawsuit. These forms are not filed but you are required to keep for no less than 3 years after the hire date or 1 year after the employee is no longer with the company.
Form W-4: You must have one for every employee. This is a withholding exemption certificate that tells the employer what tax bracket to use for the employee.
Form W-2: This is the Wage and Tax Statement. Employers must complete and report to the federal government all wages, salaries or other type of compensation paid and taxes withheld for every employee they had. Employees W2 should be issued to every employee by January 31st of the year following the reporting period.

4. Worker’s Compensation Insurance: All businesses are required to carry this insurance coverage.

5. Post Notices: By State and Federal Law, Businesses are required to post notices that inform their employees of their rights and responsibilities under labor laws. Information on workplace posters is available by state.

6. Unemployment Insurance: If your business is required to pay unemployment insurance taxes, find your State’s Workforce Agency and register your business.

7. Hiring Reporting Requirements: The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires all employers to report newly hired and re-hired employees to a state directory within 20 days of their hire or rehire date. You can also use E-Verify to avoid mismatched names and social security numbers.

8. Taxes: The type of business you operate determines what taxes you must pay and how to pay them. Each quarter employers who pay wages that are subject to income tax withholding, social security, and Medicare taxes must file this information to the IRS. Your business structure determines how and what taxes you pay.

Here are some of the forms used:
         – Form 941: Employer’s Quarterly Tax Return.
         – Form 944: Employer’s Annual Federal Tax Return (instead of Form 940)
         – Form 940: Employer’s Annual Federal Unemployment (FUTA) Tax Return

Useful Links for New Employers or Current Employers

New Hire Reporting Requirements – By State

IRS’ Employer’s Tax Guide

E-Verify: Ensure accuracy of wage & tax reporting.

Apply for an EIN Online

Workplace Posters

State Taxes – Tax filing requirements for Employers by State.

Questions, feel free to contact us at: Newinfo@mcvirtualprofessionals.com

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