{"id":96,"date":"2018-02-27T08:34:48","date_gmt":"2018-02-27T08:34:48","guid":{"rendered":"http:\/\/www.chahalassociates.com\/blog\/?p=96"},"modified":"2017-08-30T17:41:08","modified_gmt":"2017-08-30T17:41:08","slug":"did-you-hire-your-first-employee-these-are-your-tax-obligations","status":"publish","type":"post","link":"https:\/\/www.chahalassociates.com\/blog\/2018\/02\/27\/did-you-hire-your-first-employee-these-are-your-tax-obligations\/","title":{"rendered":"Did You Hire Your First Employee? These are your tax obligations"},"content":{"rendered":"

It\u2019s a major milestone for you, but it comes with a lot of paperwork that must be done correctly.<\/em><\/p>\n

Bringing a new employee into your business is a reason to celebrate. You\u2019ve done well enough as a sole proprietor that you can\u2019t handle the workload by yourself anymore.<\/p>\n

Onboarding your first worker, though, comes with a great deal of extra effort for you at first. You have to show him or her the ropes so you can offload some of the extra weight you\u2019ve been carrying.<\/p>\n

But first things first. Before your employee even shows up for the first day of work, you should have assembled all the paperwork required to keep you compliant with the IRS and other federal and state agencies.<\/p>\n

A New Number<\/strong><\/p>\n

As a one-person company, you\u2019ve been using your Social Security number as your tax ID. You\u2019re an employer now, so you\u2019ll need an Employer Identification Number (EIN). You can apply for one here.<\/a><\/p>\n

The IRS\u2019s EIN Assistant walks you through the process of applying for an Employer Identification Number (EIN).<\/p>\n

Once you\u2019ve completed the steps in the IRS\u2019s EIN Assistant, you\u2019ll receive your EIN right away, and can start using it to open a business bank account, apply for a business license, etc.<\/p>\n

You\u2019ll also need an EIN before you start paying your employee. It\u2019s required on the Form W-4. If you\u2019ve ever worked for a business yourself, you\u2019ve probably filled out this form. As an employer now, you should provide one to your new hire on the first day. When it\u2019s completed, it will help you determine how much federal income tax to withhold every payday. If you\u2019re not bringing in a full-time employee but, rather, an independent contractor, you won\u2019t be responsible for withholding and paying income taxes for that individual. You\u2019ll need to supply him or her with a Form W-9.<\/p>\n

Note: Payroll processing is probably the most complex element of small business accounting. If you don\u2019t have any experience with it, you\u2019ll probably want to use an online payroll application. After you\u2019re set up on one of these websites, you enter the hours worked every pay period. The site calculates tax withholding and payroll taxes due, then prints or direct deposits paychecks. Let us know if you want some guidance on this.<\/p>\n

Don\u2019t forget about state taxes if your state requires them, and any local obligations. The IRS maintains a page with links to each state\u2019s website. You can get information about doing business in your geographical area, which includes taxation requirements.<\/p>\n

More Forms<\/strong><\/p>\n

You also have to be in contact with your state to report a new hire (same goes if you ever re-hire someone). The Small Business Administration (SBA) can be helpful here, as it is in many other aspects of managing a small business. The organization maintains a list of links to state entities here.<\/a><\/p>\n

\"\"<\/p>\n

All employees are required to fill out a Form I-9<\/a> on the first day of a new job. New employees must also prove that they\u2019re legally eligible to work in the United States. To do this, they complete a Form I-9 from the Department of Homeland Security. As their employer, you\u2019re charged with verifying that the information provided is accurate by looking at one or a combination of documents (U.S. Passport, driver\u2019s license and birth certificate, etc.). By signing this form, you\u2019re stating that you\u2019ve done that.<\/p>\n

You can also use the U.S. government\u2019s E-Verify<\/a> online tool to confirm eligibility.<\/p>\n

A Helping Hand<\/strong><\/p>\n

The Department of Labor has a great website for new employers. The FirstStep Employment Law Advisor<\/a> helps employers understand what DOL federal employment laws apply to them and what record-keeping they they\u2019re required to do.<\/p>\n

Please consider us a resource, too, as you take on a new employee. Preparing for a complex new set of tax obligations will be a challenge. We\u2019d like to see you get everything right from the start. Call us today at our Bay Area accounting firm at\u00a0510-222-5800 or request a free consultation online.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s a major milestone for you, but it comes with a lot of paperwork that must be done correctly. Bringing a new employee into your business is a reason to celebrate. You\u2019ve done well enough as a sole proprietor that you can\u2019t handle the workload by yourself anymore. Onboarding your first worker, though, comes with […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[3,4],"tags":[10,25],"_links":{"self":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/96"}],"collection":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/comments?post=96"}],"version-history":[{"count":1,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/96\/revisions"}],"predecessor-version":[{"id":97,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/posts\/96\/revisions\/97"}],"wp:attachment":[{"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/media?parent=96"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/categories?post=96"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.chahalassociates.com\/blog\/wp-json\/wp\/v2\/tags?post=96"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}