United States — Business: Hiring Employees

Why this matters

Understanding the hiring process in the United States is crucial for businesses to avoid potential fines, lawsuits, and reputational damage.

Key facts

• An employer needs an EIN, issued free by the IRS, before hiring.
• Employers withhold income, Social Security and Medicare tax, file Form 941 quarterly and report FUTA on Form 940.
• Form W-2 reports each employee wages, tips and withheld taxes to the Social Security Administration and the employee.
• Employment eligibility documents are listed on Form I-9; check USCIS for the verification rules.
• A third-party payroll provider does not remove the employer liability for the taxes.

Steps

1. Step 1: Determine Business Structure — Decide on the business structure (sole proprietor, partnership, corporation, or LLC) and register the business with the Secretary of State's office in the relevant state.
2. Step 2: Obtain Necessary Licenses and Permits — Obtain necessary licenses and permits from local, state, and federal authorities, such as a business license, sales tax permit, and employer identification number (EIN).
3. Step 3: Comply with Labor Laws — Comply with federal, state, and local labor laws, including posting required notices, providing employee handbooks, and maintaining accurate records.
4. Step 4: Hire Employees — Recruit, hire, and onboard employees, ensuring proper tax and benefits administration, and compliance with labor laws.