The Basics Of Hiring Your First Employee
We often talk about problems that big companies have, or legal issues related to companies with a lot of employees. But small and newer companies need legal help also, and one area that many small employers may be unfamiliar with, is how to hire their first employee, and the legalities that go with hiring your first employee.
The First Steps
Before hiring anybody, you will need to obtain an employment identification number (EIN) from the IRS. This number ties your business to the IRS, and is your unique number that the IRS uses to identify you for tax issues. Getting an EIN is easy—just download form SS-4 from the IRS.
When you make your first hire, make sure that they fill out a W-4. The information on this number will help you and the IRS calculate how much of your employee’s wages need to be held back for income taxes.
Every employee needs this form. You do not need to do anything with the form, other than hold it for your records-the IRS could ask for it later on, and if they do, they will want the original copy. Any accountant that is helping you calculate employee taxes will need the form as well.
The employee will also have to fill out an I-9 to verify residency, citizenship, and eligibility to work.
Immigration issues can be confusing, and paperwork intensive, but the penalty for hiring someone who is not eligible to work can be severe. Most employees can verify eligibility simply by providing a driver’s license, or birth certificate, but a passport will suffice as well. The I-9 has to be submitted to the government’s E-Verify system within three (3) days of hiring.
The State Government
The federal government isn’t the only government you need to pay attention to. Florida also has requirements for the hiring of new employees. You have to report newly hired employees to the state, and fill out a new hire form within twenty days of the hiring.
Generally, if you are just hiring a single employee, you don’t need workers’ compensation insurance – although if you are in construction, you may, as the requirements are much stricter. If you aren’t in construction you likely are not required to get workers’ compensation for just a single employee, but you may want to anyway, as workers’ compensation prevents an employee injured on the job from suing you for personal injury damages.
Don’t forget to check with any other liability insurance policy, to see about insuring your worker–especially if he or she will work off premises, run errands, or be out of the office, but still working for you.
If you opt not to provide workers’ compensation, you still need to fill out a form with the state, requesting the exemption.
You may also have to pay unemployment tax, if your quarterly payroll exceeds 41,500 in any one year. The state maintains a website to pay the tax.
Call the West Palm Beach business litigation attorneys at Pike & Lustig to help you manage government requirements and stay in legal compliance.