Hiring Your First W2 Employees
Many start a business as a way to be self-employed. It comes full circle when their business grows to a point where they must hire employees of their own. Care should be taken to ensure that this is done legally and properly.
Know When to Hire W2 Employees Rather Than Contractors
Contractors can be hired on a 1099 basis. Some business owners try to hire everyone on this basis. However, there are some specific behavioral, financial, and relationship tests that you must consider before you can legally hire people on this basis. This is a complex matter; contact tax preparation services Long Island NY for assistance.
Understand Payroll Withholding Issues
Making a mistake on payroll withholding is one of the most serious issues in tax compliance for a small business. The mistake that many business owners make is in failing to save the money that they’ve withheld and pay this money at the intervals required by the tax authorities. If these tax payments are not made on time, it can result in some of the stiffest penalties faced by business owners. If they’re not paid at all, it can result in criminal prosecution and jail time. For this reason, you should make sure you’re using a payroll tax professional, either in-house or as a service, to precisely calculate and pay these taxes.
Obtain Worker’s Compensation Insurance
Worker’s Compensation Insurance protects you from liability in the event that one of your employees are injured on the job. It’s required in most jurisdictions. The risks of being injured may seem low in office jobs, and the premiums will reflect this lower risk compared to manufacturing jobs, but a worker can be injured in any kind of work.
There are many regulations related to hiring employees, but these are the main areas that affect you financially. You should also ensure that you’re in compliance with all federal, state, and local regulations for notifications, insurance, and occupational health.