Small Business Hiring Steps

1. I-9 – Employment Eligibility Verification

   Employers are required to verify that new employees are legally allowed to work in the U.S. This document serves that purpose. The employee will need two forms of identification.

   Employees must complete this form within three days of starting work. You, the employer, are responsible for ensuring that the form is completed properly.

   You can access the I-9 form required here.

2. W-4

   Each employee will need to fill out the W-4 form. It's used to figure out how much payroll tax to withhold from each employee. You do not actually file this form with the government; it is used to determine the number of allowances for each employee. This is provided to the your payroll service so that the correct payroll tax is deducted from paychecks.

   Payroll tax withholding is essentially based on two factors: the pay rate and the number of allowances. Allowances are determined using the W-4 form.

   You can access the W-4 form required here.

3. Register new employees with State Department of Labor

   This is a relatively new requirement, created to assist child support by identifying parents who are delinquent in payments. As an employer, you will report new employees to a special registry that has been established in each state. The state information is also sent to the National Directory of New Hires which is maintained by the Federal Government.

   Some states also require employers to report independent contractors. Like the New Employee Registry, Independent Contractor Reporting will increase child support collection by helping to locate parents who are delinquent in their child support obligations.

4. State Unemployment Insurance (SUI)

   These taxes are part of employee payroll deductions and are used to fund the government unemployment insurance program which provides temporary financial assistance to eligible employees who become unemployed through no fault of their own.

   Each state determines the exact eligibility requirements and other program details under guidelines set by the Federal Government.

   Which brings me to the last of small business hiring steps...

5. Worker's Compensation Insurance

   "Worker’s Comp" insurance provides for employees who might get injured while working for you and while on the job. Most states require employers to have Worker’s Compensation Insurance but if your state does not, you would be wise to get this anyway.

   The rate that you will have to pay is dependent on the types of workers you employ and the rate that you pay them. When you get this insurance, you will note the types of workers you have such as "clerical", "driver", "programmer" and the total wages you pay for each type.

   Each category of employee has a different rate that the insurance company has previously determined based on the experience of workplace injuries. So if you are in a hazardous industry you will end up paying higher rates on the employees in the hazard area and employees in, for example, the back office, will have lower rates.

   Note: Don't forget that this is one of the most important of the small business hiring steps. Be aware that the worker's compensation insurance group can come out and audit you. This actually happened to me once in my first business, which was not even a high-hazard workplace. Basically, an auditor comes out and reviews your payroll records to make sure that you are correctly reporting your wages, number of employees, and the type of employees you have.

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