Building your business to the point where you find yourself in need of hiring employees is an exciting milestone. That goes for any business owner. It not only signifies success, but it is also an important step in growing to another level.
There are a few things to consider as you take this important step. Having employees requires some extra work in areas that you wouldn’t always think of, such as taxes. Making sure that you handle the tax responsibility of an employee is an important consideration. Here are some things you need to know before you start hiring employees:
Worker’s Compensation Insurance
Mandated by both federal and state law, this coverage is designed to protect your employees against any income loss or medical payments that might stem from a work-related injury, illness, accident or disease.
Unemployment Insurance Tax
Along with worker’s comp insurance, you will also need to pay unemployment insurance tax, which is not withheld from employee’s wages.
Employment Tax Records
It is generally suggested that employers keep records of employment taxes for at least 4 years. This will ensure you are within the mandates of the IRS. Employers should keep track of their employee wages, sickness, tips and employee tax withholding certificates. Both the Federal Income Tax Withholding form and the Federal Wage and Tax Statement should be completed annually.
New Hire Reporting Program
As you begin to go through the hiring process for your business, remember that federal law requires all employers to report all new hires, no matter how many. These numbers should be reported to the designated state agency. The use the information to help in the prevention of unemployment compensation fraud. They can also track down parents who have become negligent in paying child support.
Find out what you are responsible for as an employer when it comes to disability insurance, which offers partial wage replacement to eligible employees for non-work related sickness or injury.
Be sure you have a tax strategy in place when it comes to filing both federal and state taxes for employees.
Spend some time learning about some of these important tax filings and reporting that need to complete when you have employees. Preparation helps as you bring employees onboard. It is always helpful to discuss your strategies and plans with an experienced accounting firm such as Hacker Accounting. We can share the advice and expertise that we have shared with so many other growing small businesses in the past.
Give us a call at 602-375-5251 to set up a free consultation today.