So the time has come for your small business to begin growing. While hiring new employees often means increased business, a reason for singing from the rooftops, the process can be confusing and downright scary to small business owners navigating the system for the first time. Federal and state penalties can be harsh, so the need to follow new-hire processes to the T is a must. At VAST, our motto is help small business owners do what they do best while we handle their financial and accounting duties. Here’s the lowdown on hiring new employees and the frightening small business financial forms associated with growing your small business team.
Apply for an Employee Identification Number
Your EIN allows your employees to file taxes. This is super simple, and can be done in a few minutes online or by phoning the IRS at 1-800-829-4933.
Create a Record System for Employee Taxes
The IRS requires quite a few different records to be held for all company tax information, the most common being a 4-year record for tax documents. Create a system now to avoid confusion and lost information in the future. The three main tax documents you’ll need to hold onto are for federal income, federal wage and tax and state taxes (depending on your state).
Verify Your New Hire’s Credentials
Employers are required to complete the I-9 form for employment eligibility. This form is needed to confirm that your new employee is indeed a citizen and available for work. While this form doesn’t need to be submitted to the government, employers are required to hold onto them for three years after the hire date or one year after termination, whichever comes later.
Register with Your State’s New Hire Program
All employers must register new employees with their state government within 20 days of hiring new employees.
Worker’s Compensation Insurance
Companies are required to carry worker’s compensation insurance, and for good reason. This will protect you and your employees in case of an accident.
Spread the Word
As a new employer, you are required by law to post informational notices in the workplace that explain a worker’s rights on the job as a U.S. Citizen. Avoid a future fine and post that poster.
Filing taxes is never fun, but neither are the penalties associated with doing them incorrectly. Depending on your company, you’ll need to submit a few different tax forms.
As employees continue to grow alongside your business, establishing a system to stay organized for all of your forms by year, employee or some other sorting system is key. Preare yourself when you first begin to grow for your own future benefit.
Small business financial forms can be confusing, but there is a plethora of information available online regarding all the different forms you might need as an employer. Visit the U.S. Small Business Administration, the IRS website or contact your local virtual accounting firm (that’s us!) with any questions you might have.