Your business is growing, and you’re ready to hire a few employees to take up the additional load. But, merely deciding to recruit new staff isn’t enough. There’s also the question of “can you”?
Legal compliance is a must before business owners can begin recruitment. Here’s a comprehensive guide on all that you need to know in this regard –
Got your EIN?
It’s mandatory to obtain an Employer Identification Number from the IRS before you can legally proceed to get staff on board.
Head to the IRS website to apply online for EIN. You need a Taxpayer Identification Number (TIN), which can be your Social Security Number, TIN for pending US Adoptions, Preparer TIN, or individual TIN. Also, answer a few questions concerning your business to successfully register it.
Get the tax withholding records in order
It’s highly essential to maintain proper records of employment taxes as per the withholding tables set by the IRS. There are primarily three types of withholding taxes necessary in this regard –
- Federal Wage and Tax statements
File this report with the Form W-2 for each person to whom you pay remuneration. A copy of it shall be sent to the Social Security Administration by February each year with the following pieces of information –
- Wages/salary paid to an employee in the previous year
- Taxes withheld for each employee in the previous year
You also need to send copies of individual W-2 forms to respective employees by 31st January.
- Federal Income Tax withholding
When you hire an employee, get them to sign and submit the W-4 form, which you need to present to the IRS.
- State taxes
You may need to withhold additional taxes premised on the state in which your employees are situated. Consult with an attorney concerning all things tax to avoid non-compliance.
Sign up with State’s New Hire Reporting System
Every business owner needs to mandatorily report any new hire to its state’s New Hire Reporting Program. It’s to be done within 20 days from when you have onboarded an employee.
Check employee’s eligibility
Employers must verify their employee’s eligibility to work in the US, per federal laws. You need to do this within 3 days post-hire by filling out the I-9 form. You do not need to submit it with any government body, but docket it with yourself for –
- 3 years from the hiring date
- 1 year from the employee’s termination date, whichever comes after
Getting worker’s comp is a must
Every organization in the US needs to obtain a Worker’s Compensation Insurance policy from a legitimate provider.
Small business owners can partner with a Professional Employer Organization to acquire a worker’s comp package. You can save up to $2400/employee on health insurance policies by signing up with a PEO.
Put up proper posters
Every business in the US needs to hang specific posters on their premises per the Department of Labor requirements. It depends on the state in which you are located. These posters are mandatory, so your employees are aware of their rights.
Keep a payroll in place
Before you recruit any employee, make it a point to have a proper payroll system, which involves a lot more than merely writing checks.
You need to remit the salary or wages per the employment agreement and company policy and should also be legally compliant. Some business owners delegate this task to a payroll service provider so they can focus on other essential matters.
Others partner with a PEO in this regard, so they can do away with all the HR tasks while being legally compliant. Read our guide on PEO vs payroll company to make an informed decision.
Once you have dealt with the heavy legal stuff, focus on finding the right candidates. Because, at the end of it all, your choice of employees will make or break your company and determine where it’s headed in the long run.
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