Business Plan Center

Hiring tips part two: After you hire new employees

After you hire new staff, collect the right information and file the correct paperwork.

Finding the right candidate is only the beginning of the hiring process. As you welcome your new hire, gather the necessary information and prepare the required documents. Here are four tips that can help ensure you've got it all covered.

1. Classify your employees correctly

Your tax obligations and compensation requirements are affected by how your employees are classified. Follow the U.S. Department of Labor guidelines as you determine a worker's status.

  • Is the worker a temporary employee hired on a contract basis or a full-time employee?

  • Is the worker exempt or non-exempt?

2. File the mandatory employee tax forms

It's critical that you submit the correct tax forms for your employees — and keep them on file for at least four years. Here are the documents you may need to prepare:

  • Form SS-4: Before you can file employer tax documents, you must obtain an employer identification number (EIN) — also called an employer tax ID — from the Internal Revenue Service (IRS) by completing an SS-4 form.

  • Form W-4: Require new employees to complete W-4 forms, which allow you to withhold federal income tax from their pay.

  • Form W-2: Each year, prepare W-2 forms, which summarize the wages paid and federal taxes withheld for each staff member, for all of your employees. Submit your W-2 forms to the Social Security Administration, and provide your employees with copies.

  • Form I-9: Complete I-9 forms within three business days of hiring to verify that new employees are eligible to work in the U.S. You’re not required to submit these forms to the IRS, but you must keep one on file for each person on your payroll.

  • State new hire reporting directory: Report new hires and re-hires to your state's directory within 20 days. Learn how to report new hires on the U.S. Small Business Administration (SBA) website.

  • Form 941: You're probably required to file quarterly employment taxes if you pay wages subject to federal tax withholding, Social Security, and Medicare taxes. Confirm your tax obligation with the IRS, and submit a 941 form each quarter, if necessary.

3. Create a benefits package

Here are some mandatory and optional benefits you may offer to employees:

Mandatory benefits

  • Workers' compensation: Purchase coverage through a commercial carrier or your state's insurance program.

  • Disability insurance: Some states require disability insurance that pays for part of an employee's salary in the event of an injury or illness that prevents him or her from working.

  • Health insurance: If you have 50 or more full-time equivalent employees, you would be subject to a penalty under Affordable Care Act if you do not provide health insurance to your staff.

Optional benefits

  • Retirement plans: If you offer a retirement or pension plan, work with your banker to choose a program, and plan for tax considerations.

  • Leave benefits: Vacation, sick days, and personal leave aren’t necessarily required by law. Check your city and state's requirements, decide which of these benefits you want to provide, and create a policy for each. Sick leave is also required in certain cities.

4. Provide hiring packets

To ensure the onboarding process goes smoothly, create a hiring packet that contains:

  • Required forms: Provide new hires with the documents they must complete. Explain why these forms are necessary and how you plan to keep their personal information private.

  • Employee manual: Outline the policies you expect employees to follow, and include information on sick time, vacation, employee conduct, discrimination and harassment, and other relevant policies.

Employers are also required to post certain labor law posters about employee rights in visible spots around the workplace.1 Consult state and federal labor laws to determine which information you must post.

Hiring new team members is exciting, but you may have questions about your legal obligations. Learn more about labor requirements on the SBA website, and visit the IRS website for more information on employment taxes.

Once you've assembled your team, determine your leadership style.


1 "Hire Your First Employee." U.S. Small Business Administration.