By Kevin Gardner | Are you expanding your team to the U.S.? As with hiring in any country, there is a lot of paperwork involved. Do you know what an employer identification number is? Do you know which forms to fill out? Here are some things you should keep in mind during the hiring process as an employer based in the United States.
File for an EIN
When you were the only employee at your business, you probably had to only worry about using a Social Security Number to identify yourself. That won’t be the case when you’re hiring new workers. If you’re planning on paying them, you’ll need to withhold taxes from their income. This means you’ll have to file for an Employer Identification Number (EIN) to identify your business and for tax purposes.
An EIN is otherwise known as a federal tax ID issued by the Internal Revenue Service. This allows the IRS to track your business to ensure that you’re collecting payroll taxes. Your paystub generator can automatically withhold taxes from your employee’s paycheck. This eliminates the need to deal with the IRS every week.
Determine the new hire’s classification
Not every worker that works for your company is going to be an employee. When you hire a new worker, you should classify whether they’re an employee or an independent contractor. The IRS lists three common law rules on its website that identifies independent contractors from employees. These rules are established and maintained regularly.
Determining your worker’s classification allows your business to better what obligations should be fulfilled to the worker and pay the right taxes. If you’re not sure which classification to use, you should file a Form SS-8. This document lets the IRS help you determine the new worker’s status. Otherwise, find out the difference between employees and independent contractors here.
Complete a Form I-9
The next step is to determine whether the new hire is eligible to work in the United States. Your new worker is required to fill out the Form I-9. This is a document used by the IRS to determine your worker’s identity and employment authorization. Both citizens and noncitizens are required to complete this form, as well as their respective employers. A state issued Driver’s License or Identification Card, Social Security Card, and passports are also required to prove the worker’s identity.
Complete a Form W-2 and Form W-4
Aside from the Form I-9, workers that are paid wages are required to fill two additional forms. Form W-2 is known as the wage and tax statement form. When the worker fills out this form, they’re allowing your company to withhold Medicare and Social Security taxes. While this form is mostly filled out by you, your employee is required to enter their name and Social Security Number.
Form W-4 is known as the ‘withholding allowance certificate form.’ When your employee fills out this form, they’re allowing income taxes to be withheld. This form must be completed and signed as soon as the new hire begins work.
Determine the new hire’s benefits
There are plenty of businesses that provide employees with benefits. Some of these benefits will vary from health insurance and unemployment to tuition or student loan reimbursement. These benefits help the employee if they ever get injured on the job or become unemployed through no fault of their own. Most of these benefits will provide coverage for doctor’s visits, dental appointments, medical concerns, vision, and more.
About the Author
Kevin Gardner graduated with a BS in Computer Science and an MBA from UCLA. He works as a business consultant for InnovateBTS where he helps companies integrate technology to improve performance. He shares his knowledge and expertise not only with his clients but with his fellow bloggers and readers.