Onboarding 101: Set Up New Employees Quickly And Legally
By Jaime Lizotte, HR Solutions Manager at ComplyRight, Inc.
Congratulations! You’ve hired a new employee. That’s a big accomplishment. It’s time-consuming and challenging to post job ads, interview candidates, check references and conduct background checks.
Unfortunately, your work isn’t done. Now you have to complete the legal paperwork and onboarding process. Here are 6 important steps to get it right:
Verify Employee Eligibility
Under federal law, you must verify an employee’s eligibility to work in the United States within three days of hiring. To do this, you’ll need to complete Form I-9, Employment Eligibility Verification. This form asks you to examine the employee’s documents (like a passport or Social Security card) to confirm his or her citizenship or eligibility to work in the United States. You do not submit the I-9 form to the government. Instead, you have to keep them on file in case your company faces an immigration audit.
QUICK TIP: Your new hire can fill out the form prior to his or her first day of work. The I-9 can be completed as soon the job offer has been extended and accepted.
Have the Employee Complete IRS Form W-4, Withholding Allowance Certificate
The Internal Revenue Service (IRS) requires every employee to complete the Form W-4. Employee’s Withholding Allowance Certificate to indicate allowances, which affects how much federal income tax you withhold from an employee’s paycheck. The form includes information on marital status, number of dependents and additional withholding amounts. The new hire should fill out a W-4 on the first day of work. And you must process the W-4 by the start of the first payroll period ending on or after the 30th day from the date received.
QUICK TIP: Be certain the employee signs the form, because it’s considered invalid without a signature.
Establish a Payroll System
As an employer, you must withhold part of each employee’s wages and remit the taxes to the appropriate authority. These taxes include federal income tax, Social Security and Medicare.
QUICK TIP: Not every state collects income tax. Check the Federal Tax Administrator’s website for the rules in your state.
Set Up a Recordkeeping System for Withholding Taxes
Start off on the right foot by setting up an organized recordkeeping system for your employees’ tax information. This will greatly simplify tax time and ensure you are complying with IRS rules. In addition to employees’ W-4 forms, you must also keep records of employees’ wages and tips (if applicable). State laws about recordkeeping may vary; be sure to check your local laws.
QUICK TIP: The IRS requires you to keep employment taxes records for at least four years after the taxes were paid.
Report Your New Employee to the State
Every state has its own new-hire reporting agency to track down parents who owe child support and aren’t paying it. You must report any new hires to this agency within 20 days of hiring.
QUICK TIP: You can find your state’s new-hire reporting agency at the Office of Child Support Enforcement website at www.acf.hhs.gov/css.
Register with Your State Labor Department
Depending on your state’s laws, you may have to pay unemployment compensation taxes. These taxes fund the state’s unemployment compensation program for people who are out of work.
QUICK TIP: Learn the laws in your state and how to register at www.business.usa.gov.
Lastly, consider an online tool to help you get new hire paperwork done more efficiently. Click here for information on simplifying your onboarding process with HRdirect’s I-9 and W-4 Smart App.