If you’re looking at onboarding your first employee, congratulations! It’s a big step in the life of any business. Since you’re dealing with paying someone else, you need to be extra sure you do it correctly! You’re dealing with someone else’s livelihood, which in itself is a big responsibility, but you’re also subject to government rules. If you break them, you’ll eventually face consequences. So here are some questions you might be asking and resources to help you find the answers you need.
1. What Paperwork Do I Need To Gather?
Typically, you’ll need to gather the following forms:
- Form W-4: This form helps you determine federal tax withholding
- State W-4 form (if applicable): Some states either don’t have state income tax or use the federal Form W-4 to determine state income tax. Check if your state has a specific form.
2. How Will I Pay The Employee?
You’ll want to consider frequency as well as the actual method of getting money into your employee’s hands (cash, check, direct deposit, etc.). When considering whether to pay your employee(s) weekly, biweekly, or monthly, you should make sure you brush up on pay frequency requirements by state. Whatever you land on, just make sure you follow your state’s rules and also notify your employees what schedule they can expect.
3. How Should I Calculate Taxes?
Your W-4 form(s) will help you make this determination. Unless the employee is exempt, you’ll usually need to withhold social security, medicare, and federal income taxes. Other possible withholdings include state or local income taxes. If this is making you want to lie down for a nap, you can make it very easy by using a payroll software with a built-in system for helping you get it right.
4.What Other Deductions Should I Be Aware Of?
In addition to the standard deductions, employees may be subject to wage garnishments, child support payments, health/life insurance premiums, or automatic retirement. If any of these apply, have new employees fill out the appropriate forms.
Payroll software can help simplify deductions and payroll big time if you’re handling them on a small scale. For large scale onboarding and payrolling, most businesses are best served by hiring a partner (like PayReel👋 !) that specializes in handling frequent, high-volume hiring and payrolling.