The steps below can help you start the hiring process and ensure you are compliant with federal and state regulations.
Obtain an Employer Identification Number (EIN)
Before hiring your first employee, you must get an Employment Identification Number (EIN) from the IRS. The EIN is necessary for reporting taxes and other documents to the IRS and for reporting information about your employees to state agencies.
Set up Records for Withholding Taxes
You must keep your employment taxes records for at least four years. Keeping good records can also help you monitor the progress of your business, prepare financial statements, keep track of deductible expenses and prepare your tax returns.
There are three types of withholding taxes you need for your business:
- Federal Income Tax Withholding
: Every employee must provide you with a signed withholding exemption certificate (Form W-4) on or before the date of employment. You must then submit Form W-4 to the IRS.
- Federal Wage and Tax Statement: Every year, you 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. You must complete a W-2 form for each employee who gets paid a salary, wage or other compensation, and then send Copy A of the W-2 forms to the Social Security Administration by the last day of February.
- State Taxes: Depending on the state where your employees are located, you may be required to withhold State Income Taxes. Visit your state and local tax page for more information.
Employee Eligibility Verification
Within three days of hiring your new employee, you must complete Form I-9, 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.
You do not need to submit the I-9 form with the federal government but you 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.
Employers can use information taken from the Form I-9 to electronically verify the employment eligibility of a newly hired employee by registering with E-Verify.
Register with Your State's New Hire Reporting Program
Every time you hire or rehire an employee you are required to report it to a State Directory within 20 days of their hire date. Each State has a unique registry and website for reporting employees.
Obtain Workers' Compensation Insurance
All businesses with employees are required to carry workers' compensation insurance coverage through a commercial carrier, on a self-insured basis or through your state’s Workers' Compensation Insurance program.
File Your Taxes
Generally, employers who pay wages subject to Income Tax Withholding, Social Security and Medicare taxes must file IRS Form 941Quarterly with the IRS in order to avoid penalties. Research your state and federal obligations carefully.
Get Organized and Keep Yourself Informed
Being a good employer doesn't stop with fulfilling your various tax and reporting obligations. Maintaining a healthy and fair workplace, providing benefits and keeping employees informed about your company's policies are key to your business' success.
If you follow these steps, you will most certainly be headed for success. Starting and maintain a healthy and thriving workforce will help your Start-up grow and achieve all that you have planned for it.
At GBS group we do not only help you get your business set up and running, we are also there to help you in every step of the way. From specific trainings for you as an employer, all the way to helping you keep a healthy work environment, we are there to guide you and help you grow. Contact us so we can start working on your future.