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Important Requirements When Hiring Employees
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Posted On: Tuesday December 30th, 2003 at 12:00am EST
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New employors need to understand the various requirements for having hiring employees. Specifically, it is important to know: what you must do if you have employees, how you must satisfy wage reporting requirements, and EIN. Hiring employees also takes on new responsibilities between you and federal and state government agencies.
When hiring employees, new forms are required to be filled out:
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a) Form I–9
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b) Form W–4, and
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c) Form W-5 (if employee qualifies for advance payments of the earned income credit).
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Form I –9
You must verify that each new employee is legally eligible to work in the
United States. Both you and the employee must complete the Immigration and
Naturalization Service (INS) Form I–9, Employment Eligibility Verification.
You can get the form from INS offices or from the INS web site at www.ins.usdoj.gov.
Call the INS at 1 –800 –375 –5283 for more information about your responsibilities.
Form W –4
Each employee must fill out Form W–4, Employee's Withholding
Allowance Certificate. You will use the filing status and withholding allowances
shown on this form to figure the amount of income tax to withhold from your employee's
wages. Each year, you must remind your employees to submit a new Form W-4 if they need
to change their withholding. For detailed instructions for completing Form W-4 see
Publication 505, Tax Withholding and Estimating Tax.
Form W –5
An eligible employee who has a qualifying child is entitled to receive advance
earned income credit (EIC) payments with his or her pay during the year. To
get these payments, the employee must give you a properly completed Form W–5,
Earned Income Credit Advance Payment Certificate. You are required to make
advance EIC payments to employees who give you a completed and signed Form
W–5. For more information see Publication 15.
Name and social security number Record each new employee’s name and social
security number from his or her social security card. Any employee without a
social security card should apply for one. The Social Security Administration
(SSA) offers social security number (SSN) verification and quick access to
relevant forms and publications.
Employment Taxes
Employers are generally required to withhold employment taxes from
their employee’s wages and manage federal, state, and local taxes.
Federal employment taxes include:
Federal income tax withholding
Social Security and Medicare taxes
Federal Unemployment (FUTA) taxes
For further information about your federal requirements with
regard to employees, you will need to obtain Publication 15,
Circular E, Employer’s Tax Guide.
Employer Identification Numbers (EIN) EINs are used to identify
the tax accounts of employers, sole proprietors, corporations,
partnerships, and other entities. If you don't already have an
EIN, you need to get one if you:
| Other common cash management tools |
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Have employees.
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Have a Keogh plan.
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Operate your business as a corporation or partnership .
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File employment, excise, alcohol, tobacco, and firearms tax returns.
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Click here to learn more about EIN's.
You can get an EIN either through the mail or by telephone, but first you must
fill out Form SS-4 (PDF),
Application for Employer Identification Number.
Wage Reporting Requirements:After the calendar year is over, you
must furnish copies of Form W-2, Wage and Tax Statement, to each
employee to whom you paid wages during the year. Additionally, you
must also send copies to the Social Security Administration. For more
information, refer to the Information Returns section of Starting a
Business and Keeping Records (Pub. 583) and the
2004 Tax Calendar (Pub 509).
| Important Downloads |
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Download Publication 15, Circular E, Employer’s Tax Guide.
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Download Form SS-4, Application for Employer Identification Number.
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Download Publication 1635, Understanding Your EIN.
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Download Publication 583, Starting a Business and Keeping Records.
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Download Publication 509, Tax Calendar for 2001.
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Download Form I-9, Employment Eligibility Verification.
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Download Form SS-5, Application for Social Security Card.
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Download Form W-4, Employee’s Withholding Allowance Certificate.
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Download Publication 505, Tax Withholding and Estimating Tax.
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Download Publication 954, Tax Incentives for Empowerment Zones and Other Distressed Communities.
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Form W-4 (2000) Withholding Allowance Calculator.
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