Hiring employees can be time-consuming, but it doesn’t have to be complicated. If you’re a member of an LLC looking to hire a new employee, following some key steps will make the process a lot smoother.
Requirements for hiring a new employee Get an Employer Identification Number (EIN).
The IRS requires every business with employees to have an EIN. This number identifies your business for tax purposes, and acts as the business equivalent of a social security number. You can easily apply for an EIN
online. Post any necessary notices.
As an employer, you’ll need to display posters that tell employees what rights they have under the law. You should put them in an easily accessible location, such as outside a restroom or cafeteria. A full list of posters—and when you’ll need them—can be found on the Department of Labor’s website. Register with your state’s labor or employment office.
Every time you hire an employee, you’ll need to let your state’s labor department know so that you can pay unemployment compensation taxes (and so they can keep track of who is and isn’t employed). Your state’s labor office should provide registration instructions. Report every new hire to your state’s New Hire Reporting Center
When you hire a new employee, you have 20 days to provide information about them to your state’s New Hire Reporting Center. In most states, you’ll need to list the employee’s name, address, SSN, and date of hire, along with your company’s name, address, and federal EIN. Gather the right forms to fill out.
Both you and your employee will need to complete several forms as part of the hiring process:
Set up payroll, learn about employer taxes, and set up your record keeping.
- I-9: You’ll need to fill out and keep an I-9 for each employee, which verifies that they are eligible to work in the US.
- Form 940: You’ll also need to fill out Form 940 so you can report Federal Unemployment Tax Act (FUTA).
- W-4: Have each employee fill out a W-4, which allows the IRS to withhold the right amount of money from the employee’s paycheck.
This is where it gets tricky. Fortunately, the IRS has a detailed Employer’s Tax Guide
explaining your responsibilities as an employer when it comes to handling payroll, paying employees, withholding taxes, and keeping records. Get the right insurance.
If your business will have employees, you’ll need to get workers’ compensation insurance. Depending on your business and where it’s located, you may also be required to get disability insurance. Follow workplace safety standards.
As an employer, it’s your responsibility to provide a safe workplace, and reduce any dangers to the lowest practical level. The job of the Occupational Safety & Health Administration (OSHA) is to make sure that happens. You can refer to their Small Business Handbook
to make sure you meet the legal requirements for a safe workplace. Follow fair hiring laws.
Read up on fair hiring practices before hiring anyone, and remember that many states have their own employment laws, in addition to federal ones. You’ll also want to learn the difference between hiring a full-time employee and an independent contractor
Good practices when hiring a new employee
Now that we’ve covered what you’re required to do, here’s some optional things that will help make the hiring process easier. Create an employee handbook.
While you’re not required to have one by law, it’s still smart to create one
. Outsource payroll when it becomes too much.
Even companies with a single employee may end up saving time and money by hiring a payroll company or independent contractor to handle payroll.
Adding a new member to an LLC
What if you’re an LLC and you want to add a member (another owner) to your LLC? #1: Consult your operating agreement, if you have one. (If you don’t, create one
now.) #2: Amend your articles of organization and file them with the secretary of state if required. #3: Get a new EIN if necessary. If you’re a single-member LLC and you add a member, you will need a new EIN. Also, if you were taxed as a disregarded entity, you will now be taxed as a partnership.
Need advice on hiring an employee for your LLC?
Consider talking with a business lawyer
or employment lawyer
for guidance and legal advice.