If business is booming but you are finding less time to keep up, it might be time to hire some help.
Here are eight must-know things that can help you start the hiring process and ensure you are following key federal and state regulations.
1. Obtain an Employer Identification Number (EIN)
Every business needs one, but before hiring your first employee, you must get an employment identification number (EIN) from the Internal Revenue Service. The EIN is also referred to as an Employer Tax ID. Businesses need an EIN for reporting taxes and other documents to the IRS. In addition, you need an EIN when reporting information about your employees to state agencies. Obtain the number via online with the IRS or using Form SS-4.
2. Set up Records for Withholding Taxes
Businesses must keep records of employment taxes for at least four years. Keeping good records can also help you monitor the progress of your business, prepare financial statements, identify sources of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns.
Below are three types of withholding taxes you need for your business:
Federal Income Tax Withholding
Every employee must provide an employer with a signed withholding exemption certificate (Form W-4) on or before the date of employment.
Federal Wage and Tax Statement
Every year, employers must report to the federal government wages paid and taxes withheld for each employee. This report is filed using Form W-2, wage and tax statement. Employers must complete a W-2 form for each employee who they pay a salary, wage or other compensation.
Employers must send Copy A of W-2 forms to the Social Security Administration by the last day of January to report wages and taxes of your employees for the previous calendar year. In addition, employers must send copies of W-2 forms to their employees by Jan. 31 of the year following the reporting period.
Depending on the state where your employees are located, you may be required to withhold state income taxes.
3. Employee Eligibility Verification
Federal law requires employers to verify an employee's eligibility to work in the United States. Within three days of hire, employers must complete Form I-9, employment eligibility verification, which requires employers to examine documents to confirm the employee's citizenship or eligibility to work in the U.S. Employers can only request documentation specified on the I-9 form.
Employers do not need to submit the I-9 form with the federal government but are required to keep them on file for three years after the date of hire or one year after the date of the employee's termination, whichever is later.
4. Register with Your State's New Hire Reporting Program
All employers are required to report newly hired and re-hired employees to a state directory within 20 days of their hire or rehire date.
5. Obtain Workers' Compensation Insurance
Businesses with four or more part-time or full time employees in a non-construction industry in the State of Florida are required to carry workers' compensation insurance coverage through a commercial carrier, on a self-insured basis or through their state’s Workers' Compensation Insurance program. In Florida for a construction industry employer, the number is reduced to one or more part-time or full time employees. The construction industry owner may request an exemption for himself/herself.
6. Post Required Notices
Employers are required to display certain posters in the workplace that inform employees of their rights and employer responsibilities under labor laws.
7. File Your Taxes
Employers who pay wages subject to income tax withholding, Social Security and Medicare taxes must file IRS Form 941, Employer's Quarterly Federal Tax Return.
8. Get Organized and Keep Yourself Informed
Simply following these steps won’t make you a good employer. Maintaining a healthy and fair workplace, providing benefits and keeping employees informed about your company's policies are key to your business' success. Be sure to set up good record keeping that are in compliance with standards for employee rights in regards to equal opportunity and fair labor standards. And, following statutes and regulations for minimum wage, overtime, and child labor will help you avoid error and a lawsuit.
If you need some help with your first new hire, feel free to contact Jones and Company CPAs P.A. at 727-845-4166.