How to Hire an Employee
Hiring an employee involves a number of important legal steps. Many of these steps, such as registering with the federal government and purchasing insurance coverage, only need to be completed once. Other steps, including filling out tax forms and registering your new hire, must be repeated with each new employee. Here is a guide to understanding the various legal processes involved with hiring an employee.
Register with the federal and state governmentIn order to start hiring employees, you will need to register your business with the Internal Revenue Service (IRS). The IRS assigns you an Employee Identification Number, which you use for reporting taxes and hiring information to state agencies. You can register with the IRS online.
All employers are required to report new hires (or re-hired) employees within the first 20 days of hiring. You can find information on your state’s New Hire Reporting System online.
Fill out the right forms Before or during the start of employment, the new hire must also submit a W-4 form to the employer and the IRS. The W-4 form helps employers calculate how much tax to deduct from an employee’s wages. Your new employee only needs to fill out the W-4 form one time, but when tax season comes around, you will have an annual set of forms to fill and submit to the IRS.
You must fill out an I-9 form to verify that your employee is eligible to work in the United States. The I-9 form requires you to inspect particular forms of documentation to confirm that the employee is allowed to work in America. Note that employers may only request the information listed on the form. Unlike the W-4 form, you are not required to submit Form I-9 to the government, but you must hold onto to it for three years after the date of hire. If a federal customs agency audits your business, you will be liable for any missing or incomplete information.
Get your insurance in orderYou will need various types of insurance to cover your employees. You must provide Workers’ Compensation Insurance, which you can obtain through the state, a commercial carrier or self-insurance. Workers’ Compensation provides coverage for employees who have been affected by a job-related illness or injury.
Liable employers will also have to pay unemployment insurance taxes. Each state has different standards deciding who is required to pay these taxes, and if your business fits the bill, you must register with the state’s workforce agency. Some states also require businesses to provide disability insurance for non-related illness or injury.
Post required workplace posters Federal and state mandate requires employers to visibly exhibit posters explaining employee’s rights. These posters convey information related to labor laws such as the Equal Employment Opportunity Act, the Occupational Safety and Health Act and the Fair Labor Standards Act. To view the posters and find out which ones you are required to post, visit the Small Business Administration’s website.
Hiring people with disabilities Businesses with 15 or more employees are required to provide reasonable accommodation for employees with disabilities. In addition to the requirements by law, various government programs offer tax incentives for businesses who hire people with disabilities. Note that if you want to give a medical exam to test someone’s qualifications for a job, you are required to give that exam to all prospective employees. Check out this government primer for more information on hiring people with disabilities.