When you find yourself struggling to keep up with your booming business, it is time to hire some help. Employees are an asset to a business. It is important that the interview process reflect the need of the business, but it is even more important that the business’s ability to hire employees complies with both state and federal regulations.
Before Hiring an Employee
Businesses that desire to hire employees must have an Employer Identification Number (EIN). The EIN is used to report to the U.S. Internal Revenue Service (IRS) and is also known as the Employer Tax ID (Form SS-4). The EIN is a lot like a Social Security number for your business, and is used to report taxes as well as information about employees to state agencies. If you do not have an EIN, you should obtain one immediately.
As a business owner it is your responsibility to record your business expenses, costs, profits, etc. These records will aid you in monitoring your business and in preparing and supporting tax returns. There are three different taxes that may be withheld: federal income tax withholdings, federal wage and tax statement, and state taxes. Employers who pay employee wages may be subject to these withholdings.
Hiring New Employees
Once you have taken the previous steps you are now ready to obtain the forms required by federal law to verify an employee’s eligibility to work in the United States. As an employer you are responsible for verifying an applicant’s eligibility to work. Failure to comply with the federal regulation may result in legal action against you as the business owner. Employers verify employee eligibility by viewing documentation required by Form I-9. As a business owner, it is your responsibility to fill out an I-9 for all of your employees and to keep it on file for three years after the date of hire or a year after termination, whichever is longer.
States require businesses to report newly hired and rehired employees within 20 days of their rehire or hire date. As a business owner you should seek out your state’s local reporting rules for compliance. Workers’ compensation insurance is also required for many business owners. Workers’ compensation is beneficial for both the employee and employer by protecting both in the instance of injury.
Business owners considering hiring employees should seek legal advice. The information provided is a helpful guide to starting the process, but there is much more to consider in the process. Seeking legal advice is in the best interest of the business and in the prevention of failure to comply with federal and state regulations. Reach out to business attorney Stuart A. Mickelberg, Esq. for help with your legal needs.