Hiring your first employee is exciting, but confusing. It opens the door to numerous new requirements and payroll concerns. What do you need to do now that you are employing people?
Before you can hire your first employee, you must set up an EIN
Your Employee Identification Number is much like a Social Security number for a business. It’s a unique code from the IRS that identifies your business. You’ll use it for reporting income, securing permits, and establishing payroll accounts. It only takes a few minutes and can be done online.
Learn from the Department of Labor
The Department of Labor is your go-to source for information on federally required labor laws. You’ll not only need to learn about these laws, but you also need to post information within your business that employees can access about their rights. You can do this at the Department of Labor Poster Advisor website.
Work with a Payroll Provider
You do not have to use a third party to manage your payroll but it is by far the most affordable and effective step for most businesses. In short, they handle paying your employees, reporting income and withholdings to the IRS, handle retirement accounts for employees, and submit withheld taxes to the IRS and state agencies for you. It’s one of the most effective ways of streamlining the payment and reporting process.
Collect and Manage Employee-Related Documents
When hiring an employee, you’ll need to ensure each person fills out a Form 1-9, which ensures they are legally allowed to work in the United States. You’ll also need to help employees complete W-4 forms, which determine how much tax you’ll need to withhold for tax purposes. You’ll also need to report your new employee to the state’s new hire reporting website. Every state requires this.
When you have hired your first employee, you’ll see the importance of using a well-qualified payroll company to help you to pay your employees, manage taxes, submit taxes to the government, and meet all other reporting requirements your local, state, and federal government requires. Avoid the fees of making mistakes in these areas by hiring the right team for the job.