Are you trying to figure out what employee payroll forms you need before you can pay them? Read this article to learn more.
Are you looking to join the 30.7 million small businesses in the United States by starting your own company?
When you decide to branch out on your own and start your own business, it’s an exhilarating feeling. However, it also comes with a lot of responsibility.
One of the most attractive reasons to start your own small business is that it allows you to be your own boss. But, if you have enough work to justify hiring employees, it also means you’ll become someone else’s boss.
Are you prepared? Do you know which employee payroll forms you need to start paying employees? If not, we’re here to help.
Keep reading for an overview of the documents needed for payroll so your new business can start to thrive.
Make Sure You’re Set up Properly First
Before you can even think about hiring and paying employees, you need to get your ducks in a row first. In order to operate as an employer, there are certain requirements you must meet.
Register for an Employer Identification Number (EIN)
The first step is to register for an EIN. This unique identifier serves almost like a Social Security Number for your business. Your EIN will be included on most employee payroll forms, so you need to have it in place before hiring an employee.
You can apply for an EIN online on the IRS website.
Register for Appropriate Tax ID Numbers
Of course, any time you pay an employee, taxes are also involved. If you live in a state that collects an income tax, you’ll need to apply for a state tax ID number accordingly.
Similarly, if your local municipality charges income tax, you’ll also need to apply for a local tax ID.
Register for a State Unemployment ID
As an employer, your business will need to pay state unemployment taxes for your employees. Depending on your state, you may need to apply for a separate state unemployment ID number.
Fill Out Required Employee Payroll Forms
Once you’re all set up, you can start hiring employees to help you grow your business! But, before you can pay them, you must make sure to complete all the necessary paperwork.
Form I-9: Employment Eligibility
Since you can only hire employees that are eligible to work in the United States, you must be able to prove their eligibility. To do this, you’ll need an I-9 or Employment Eligibility Verification form.
Citizens and noncitizens alike need to fill out this form, which contains questions about employment eligibility and personal information. To complete the form, employees will need to provide documents that prove their identity and work eligibility.
Your employee must fill out the first section of the form, then you’ll need to fill out the second section with your business information.
Form W-2: Wage and Tax Statement
As we mentioned above, once you begin paying an employee, taxes will be taken out according to federal and state regulations. You’ll need an employee’s Social Security Number (SSN) in order to hire him or her, and the SSN should be included on the W-2.
If a potential employee does not have a Social Security Number, he or she should apply for one through the IRS.
Form W-4: Employee’s Withholding Certificate
The amount of income tax that should be withheld from a paycheck can vary by each employee. To determine how much to withhold, employees will need to fill out a W-4.
The information filled out on a W-4 can increase or decrease the amount withheld for federal taxes and employees can adjust their information on this form any time throughout the year.
If you live in a state that collects income tax on a state level, all of your employees will also have to fill out a State W-4. Much like the standard W-4, the State W-4 determines the amount held for state income taxes.
Bank Account Information
While not required on a federal level, some states have enacted mandatory direct deposit laws. If you live in one such state, your employees will need to fill out a form to collect their bank account information.
If your state doesn’t require direct deposit, you may decide to offer that as an option to your employees. In that case, they will still need to fill out their bank account information and include the following:
- Employee name
- The type of banking account, such as checking or savings
- Name of financial institution
- Bank or credit union’s routing number
- Employee’s account number
Other Important Paperwork
While not related to payroll, it’s a good idea to have your employees also fill out other new hire paperwork at the same time. Depending on your business and the benefits you offer, this paperwork may include:
- Emergency contact information
- Health and/or dental insurance information
- Retirement plans, like a 401(k) match
It’s best to either send all of this paperwork to employees a few days ahead of their start date or have them complete the forms on their first day.
Once your employees have filled out all the paperwork covered above, you can start to pay them for their services. Some states require a paystub to be issued to employees.
While most paystubs follow a similar format, you can take the guesswork out of what to include by using a paystub template to generate them for your employees.
This will make your life as a busy small business owner a bit easier. And, it gives your employees a transparent look at how much they’re making during each pay period.
Become the Best Business Owner You Can Be
Now that you know which employee payroll forms are needed before you can start hiring and paying employees, you’ve taken the first step towards building your business!
However, the work doesn’t stop now. There’s still plenty to learn to help you and your business be successful. Read through our website to learn more about small business tips, finances, and more as you begin this exciting new journey in your career.