Thinking of taking on some help? Whether you're hiring employees or independent contractors, you're going to need someone who has an
entrepreneurial mindset. If you're considering building a team, you need a group of like-minded individuals who share your passion. But, if you need accounting or data entry help, you don't want to hire an entrepreneur for that.
You need to know the difference between hiring entrepreneurs and hiring the right people for the job. If you need to find more entrepreneurial people, you need to attend conferences, events, or any site that involves a startup.
But, hiring a new employee isn't as easy as you may think. 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.
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 tax. Your paystub generator can automatically withhold taxes from your employee's paycheck. This eliminates the need to deal with the IRS on a weekly basis.
Determine 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 has listed three common law rules on its website that identifies independent contractors from employees. These rules are established and maintained on a regular basis.
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.
The 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 sign as soon as the new hire begins work.
Determine 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.