US New Hire Paperwork

US New Hire Paperwork

What is US new hire paperwork?

New hire paperwork is the set of forms that employers must complete when hiring a new employee. In the United States, these forms include the W-4 form, the I-9 form, and State Registration. The forms collect information about the new employee, their work eligibility, and their income. These forms also inform agencies, such as the IRS and or U.S. Department of Health and Human Services, about the new employee’s place of employment.

Properly onboarding a new employee is critical in the employee’s journey with the company. The onboarding process is where the company makes its first impression. It is also a key tool in helping set expectations of the employee’s experience with the company. Hiring managers and leaders should ensure that their company’s onboarding process is smooth and sets the employee up for success.

US New Hire Paperwork

When does new hire paperwork have to be completed?

Employers must complete new hire paperwork for every employee before the employee’s first paycheck. HR Managers should have employees fill out all necessary forms on their first day of work.

Getting set up – before hiring your first employee

As an employer, before hiring an employee, you will need to complete two registrations:

1) Register your business for an Employer ID Number (EIN)

2) Enroll for the IRS Payment System

The Employer ID Number is your business number, which you will use for payroll tax reports and payment purposes. You can go online to to register for an EIN.

The IRS Payment system is an online system where you can deposit employment taxes from employee withholding. This is done through the IRS Electronic Federal Tax Payment System (EFTPS). Enrolling allows you to easily make payments for taxes collected.

Federal requirements – W-4 and I-9 forms

There are two federal forms that employers must fill out for each employee: the W-4 and I-9.

The W-4 Form is the Federal Income Tax Withholding. This is where employees state how much income tax, Social security, and Medicare will be withheld from their paychecks. Depending on their situation, an employee may specify a different withholding amount. For example, if an employee is expecting to receive a large bonus or has another part-time job, they may want to specify a different withholding amount.

Employees should refer to their personal accountant and or review the IRS website for information on how much tax they should specify to withhold. Employers should not advise employees on how to complete the W-4 Form.

Employees can also change and update their W-4 Forms as often as they like. They may do this is if their situation changes. The employer is responsible for keeping track of all W-4 Form changes.

Note: As of January 1, 2020, all new employees and current employees who want to change their withholding have to fill out a W-4.

The Form I-9 is for Employment Eligibility Verification. Employers must verify that all new employees are eligible to work in the United States. New employees must complete the form and provide documentation of their identity and work eligibility. Employers are responsible for verifying the documents.

Once employers are satisfied that the documents are sufficient, they should store copies along with the employee’s other records. This will be used for audit purposes and or if the immigration officer inspects your office.

There is also an E-Verify system available to large employers who want to verify new employees’ eligibility. The system validates the information from Form I-9 with information available in federal databases.

State requirements

Employers need to register new employees with the state to collect and deposit new employee’s state income taxes. Depending on the state, there can be up to three registrations that each new hire must complete.

State new hire registration system – the U.S. Department of Health and Human Services provides information, by state, on how to register new employees. Registration is required so that the state can collect from employees on outstanding payments, such as child support.

State employer registration – for states that collect income taxes, employers need to register to collect and remit state income taxes from their employees.

State unemployment tax – unlike income tax, employers are the ones that pay state unemployment tax contributions. They do so to the state’s labour department. The taxes are pooled into a fund that is used to pay employees if they are laid off.

State worker’s compensation – similar to unemployment tax, employers pay into a state worker’s compensation fund. The monies are used to pay an employee if they become sick or injured on the job.

Job Application Form

Employers should require that candidates fill out a job application form as part of the hiring process. By doing so, you can ensure that you collect the following from the employee:

  1. Agreement to statement that the information the employee is stating is true and correct
  2. Consent for you to conduct reference and background checks

Collecting both from every employee will legally protect employers from fraudulent claims.

Onboarding Process

On the employee’s first day, in addition to completing the W-4 and I-9 forms, be sure to have employees review and sign the Employee Handbook. The handbook should contain the company’s policies and procedures and should serve as a tool for setting workplace expectations with the new employee. Having the employee sign and acknowledge can help mitigate against potential lawsuits.

What should I do with the forms after?

Be sure to keep all forms filed with the employees’ information. Each respective federal and state department may have different requirements on what employee information must be kept on record. For example, the IRS will have record compliance requirements for employment taxes, which may be different than the U.S. Department of Labor’s requirements for employee records. Thus, employers should familiarize themselves with federal and state compliance requirements.

Key takeaways

  • Every new employee must complete a W-4 and I-9 form as part of the hiring process.
  • Employers typically collect taxes on behalf of employees and pay them to the respective federal and state agencies.
  • Employers should create a job application form to ensure they obtain consent from potential employees for a background and reference check and to have potential employees verify their statements are true.

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