Question: We are a small business and will begin hiring new employees this year. I want to make sure that we are compliant with all state and federal regulations. What are the required forms for new hires?
Answer: As an employer, several forms are necessary (depending on your state) when hiring new employees, or when an existing employee requests a change to their payroll records. It is your responsibility to ensure that employees complete each of these forms, and to retain copies for your records in a secure location (since they contain personal data).
These forms should be completed before the new hire’s start date. We suggest sending these forms to new employees as part of a welcome packet. This will give them an opportunity to complete the forms prior to the start of work, as well as ensure that they have all the required information and documentation.
W-4 – Federal Withholding
This form includes information on marital status, number of dependents, and designated additional withholding amounts. The information provided on the employee form W-4 must be used by the employer/payroll provider to calculate withholding for federal income taxes.
The form W-4 includes instructions for completing the form. If a new hire (or current employee) needs assistance completing the form, they should consult with their tax preparer or contact the Internal Revenue Service for assistance. Employers should not give employees advice on how to complete this form, but you can direct them to an IRS article that helps them complete this form.
Employees are encouraged, but not required, to complete a new W-4 form annually. Employers must allow employees to change their W-4 form as often as they like. It is the employer’s responsibility to keep a copy of their employee’s most up-to-date W-4 forms. This allows employers to keep track of the latest changes, as well as make sure employee paychecks reflect the appropriate withholding amounts per the updated W-4.
Employers must report new employees to their state’s new hire notification system. The state uses the notifications to collect child support payments from these employees.
For states that have an income tax, the employee needs to complete the state equivalent of the W-4 form. As an employer, it is mandatory to deduct these taxes from employee paychecks. The withheld taxes are sent to the appropriate state agency with the necessary forms based on your filing status.
As an employer, you must use the Form I-9: Employment Eligibility Verification to document the eligibility of new employees to work in the U.S. The form must be completed by each new hire. On the form, the new employee must specify which identity and work eligibility documents will be used for verification. The employer must review the original documents and make sure they are appropriate.
This form must be kept in the employee’s record, but employers are not required to send it to any federal or state agency. If an immigration officer comes to your company or wants to inspect your employee documents, the form is proof that you verified the employee’s work eligibility.
Employers should have each new employee complete a job application form, even if this person has already submitted a resume. The job application should contain information about the new employee that can be verified (such as previous employers, education, and references).
The application should also include several statements the applicant must sign. One statement on the application form attests that the information on the application is true and correct. The other statement allows the employer to conduct reference checks and background checks.
Having an application form for every employee protects the employer from potential fraudulent claims. It also allows the employer to take appropriate action if the application form is not true and accurate.
Direct Deposit Authorization
If you will be paying your employees by direct deposit to either a bank account or prepaid debit card, you will need to get signed authorization from the employee. Many states allow employers to mandate electronic payments to employees, making payroll easier and more secure. Check with your state’s department of labor for specific regulations.
Payroll compliance is extremely important and helps prevent further issues from arriving in the future. For further assistance with your payroll or bookkeeping needs, contact Think Beyond the Desktop.