Growing your company may mean more complex taxes<\/h3>
Our Small Business-certified tax pros can help<\/p>
Employer tax responsibilities<\/h2>\n\n\n\n![\"A](\"\/wp-content\/uploads\/2021\/07\/hiring-employees.jpg\")
<\/figure>\n<\/div>\n\n\nOnce you find the right person with the perfect combination of skills and experience, you\u2019ll want to run through this checklist.<\/p>\n\n\n\n
1 \u2013 Securely collect and maintain employee records<\/h3>\n\n\n\n
Record keeping should be a high priority for small business owners. Why? Just ask the IRS and various other governmental agencies.<\/p>\n\n\n\n
Employee records include each employee\u2019s personal identifying information, and the data necessary to properly collect and pay federal and state taxes.<\/p>\n\n\n\n
You must maintain these employment records while you employ the individual for four years. You also need to have the records available for the IRS on demand.<\/p>\n\n\n\n
2 \u2013 Make sure each employee is eligible to work in the U.S.<\/h3>\n\n\n\n
Federal law requires every employee starting a new job to complete the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get I-9 Forms online<\/a>, at USCIS offices, or by calling (800) 870-3676.<\/p>\n\n\n\n3 \u2013 Get each employee\u2019s Social Security numbers<\/h3>\n\n\n\n
You must get each employee\u2019s name and Social Security number (SSN) to complete a Form W-2, Wage and Tax Statement, for each person. This requirement also applies to resident and nonresident aliens.<\/p>\n\n\n\n
You shouldn\u2019t accept an Individual Tax Identification Number (ITIN) in place of an SSN for employee identification or for work. ITINs are available only to resident and nonresident aliens who aren\u2019t eligible for U.S. employment and need identification for other tax purposes.<\/p>\n\n\n\n
4 \u2013 Obtain a Form W-4 to withhold income taxes<\/h3>\n\n\n\n
New employees should fill out IRS Form W-4 so you can withhold the proper federal income tax from their paychecks. Use the information your employee provides on the form to calculate their federal tax withholdings.<\/p>\n\n\n\n
State law also requires employers to withhold income tax from your employees\u2019 wages.<\/p>\n\n\n\n
Give your newly hired employees the Form W-4, Employee\u2019s Withholding Certificate to fill out and return to you. Your employees will use Form W-4 to figure out their withholdings, but you can also guide employees to the IRS withholding estimator<\/a>. Or, for a tool that provides a completed form, have them check out H&R Block\u2019s W-4 Calculator<\/a>.<\/p>\n\n\n\nThen, you will determine how much to withhold when it comes to federal income tax<\/a>. The amount is based on your employees\u2019 filing status, income, W-4 information and payroll period. This varies based on if your employees are paid weekly, bi-monthly, or monthly.<\/p>\n\n\n\nIf a new employee doesn\u2019t give you a completed Form W-4, you should withhold tax as if the employee is single. You may have to withhold additional taxes on wages paid to nonresident aliens.<\/p>\n\n\n\n
5 \u2013 Withhold Social Security and Medicare taxes<\/h3>\n\n\n\n
You must withhold Social Security and Medicare taxes from your employees\u2019 wages and pay the employer\u2019s share of these taxes, as well. These are known as Federal Insurance Contribution Act (FICA) taxes<\/a>.<\/a><\/p>\n\n\n\nGenerally, all employee wages are subject to these taxes, regardless of age or whether they receive Social Security benefits. Even retirement contributions, that will lower an employee\u2019s taxable wages, are still subject to Social Security and Medicare taxes.<\/p>\n\n\n\n
Please note, there\u2019s a limit on the amount of annual wages or earned income subject to taxation, called a tax cap. In 2022, the maximum amount of income subject to the Social Security tax is $147,000. Medicare tax is due on the entire salary.<\/p>\n\n\n\n
6 \u2013 Deposit all the withheld taxes<\/h3>\n\n\n\n
As part of your payroll tax duties, you must deposit federal income taxes you withhold from your employees\u2019 pay, as well as the employer and employee portions of Social Security and Medicare taxes. You should make these federal tax deposits electronically.<\/p>\n\n\n\n
How to make electronic deposits<\/h4>\n\n\n\n
Most employers use the Electronic Federal Tax Payment System (EFTPS). It\u2019s a free service that the Department of Treasury provides. You\u2019re automatically pre-enrolled when you request an EIN from the IRS<\/a>. If you don\u2019t want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make the electronic deposits for you.<\/p>\n\n\n\nThere are two deposit schedules: monthly and semi-weekly.<\/p>\n\n\n\n
Before the beginning of each calendar year, you must determine which schedule to use. The schedule is based on the total tax liability you reported during the last year. In the first year you have employees, you\u2019ll generally deposit taxes on a monthly basis. Under the monthly deposit schedule, you\u2019ll need to deposit employment taxes by the 15th day of the next month.<\/p>\n\n\n\n
You\u2019ll also need to file Form 941<\/a>, Employer\u2019s Quarterly Federal Tax Return, with the IRS for every quarter that you pay wages subject to income tax withholding (including withholding on sick pay and supplemental unemployment benefits), or Social Security and Medicare taxes. That\u2019s unless you get a notification from the IRS saying that you can file a Form 944, Employer\u2019s Annual Federal Tax Return.<\/p>\n\n\n\nRemember: Don\u2019t ever use federal tax deposits for other purposes.<\/h3>\n\n\n\n
If you don\u2019t send the government required federal tax deposits, the IRS will pursue the debt, and you can be subject to tax penalties, in addition to the tax bill.<\/p>\n\n\n\n
7 \u2013 Every quarter pay Federal Unemployment Tax (FUTA)<\/h3>\n\n\n\n
Only the employer pays FUTA<\/a>; it isn\u2019t withheld from employees\u2019 wages. For 2022, the FUTA rate is 6% of the first $7,000 of wages you pay to each employee during the year. If your business pays into the state unemployment system, the amount will lower what you pay federally.<\/p>\n\n\n\nYou must deposit FUTA by the last day of the first month that follows the end of the quarter. If the due date for making the deposit falls on a Saturday, Sunday, or legal holiday, you can make the deposit on the next business day.<\/p>\n\n\n\n
8 \u2013 Don\u2019t forget about state tax issues<\/h3>\n\n\n\n
In addition to all the federal requirements, you must follow regulations from each state whose residents you employ, including withholding for state taxes where applicable. State requirements are usually similar to federal requirements. But states can modify their requirements, so it\u2019s critical to learn the state requirements that may apply to you.<\/p>\n\n\n\n
Hiring employees for the first time is complicated \u2013 Let us help<\/h2>\n\n\n\n
As you can see, hiring employees for the first time is complicated \u2013 and the stakes are high if you don\u2019t get it right from a tax perspective. That\u2019s why many small business owners seek professional <\/a>bookkeeping <\/a>help<\/a>.<\/p>\n\n\n\nIf hiring employees is on your to-do list, make sure your next step is to get help from Block Advisors for small business tax<\/a>, bookkeeping<\/a> services<\/a>, and employer payroll<\/a> responsibilities \u2013 so you can get back to what you love about your business.<\/p>\n\n\n\nSee how we can help with your payroll needs and answer your payroll questions.<\/p>\n\n\n\n
Schedule a free payroll consultation today<\/strong><\/a>.<\/p>\n\n\n\n
\n\n\n
<\/figure>\n<\/div>\n\n\nOnce you find the right person with the perfect combination of skills and experience, you\u2019ll want to run through this checklist.<\/p>\n\n\n\n
1 \u2013 Securely collect and maintain employee records<\/h3>\n\n\n\n
Record keeping should be a high priority for small business owners. Why? Just ask the IRS and various other governmental agencies.<\/p>\n\n\n\n
Employee records include each employee\u2019s personal identifying information, and the data necessary to properly collect and pay federal and state taxes.<\/p>\n\n\n\n
You must maintain these employment records while you employ the individual for four years. You also need to have the records available for the IRS on demand.<\/p>\n\n\n\n
2 \u2013 Make sure each employee is eligible to work in the U.S.<\/h3>\n\n\n\n
Federal law requires every employee starting a new job to complete the U.S. Citizenship and Immigration Services (USCIS) Form I-9, Employment Eligibility Verification. You can get I-9 Forms online<\/a>, at USCIS offices, or by calling (800) 870-3676.<\/p>\n\n\n\n You must get each employee\u2019s name and Social Security number (SSN) to complete a Form W-2, Wage and Tax Statement, for each person. This requirement also applies to resident and nonresident aliens.<\/p>\n\n\n\n You shouldn\u2019t accept an Individual Tax Identification Number (ITIN) in place of an SSN for employee identification or for work. ITINs are available only to resident and nonresident aliens who aren\u2019t eligible for U.S. employment and need identification for other tax purposes.<\/p>\n\n\n\n New employees should fill out IRS Form W-4 so you can withhold the proper federal income tax from their paychecks. Use the information your employee provides on the form to calculate their federal tax withholdings.<\/p>\n\n\n\n State law also requires employers to withhold income tax from your employees\u2019 wages.<\/p>\n\n\n\n Give your newly hired employees the Form W-4, Employee\u2019s Withholding Certificate to fill out and return to you. Your employees will use Form W-4 to figure out their withholdings, but you can also guide employees to the IRS withholding estimator<\/a>. Or, for a tool that provides a completed form, have them check out H&R Block\u2019s W-4 Calculator<\/a>.<\/p>\n\n\n\n Then, you will determine how much to withhold when it comes to federal income tax<\/a>. The amount is based on your employees\u2019 filing status, income, W-4 information and payroll period. This varies based on if your employees are paid weekly, bi-monthly, or monthly.<\/p>\n\n\n\n If a new employee doesn\u2019t give you a completed Form W-4, you should withhold tax as if the employee is single. You may have to withhold additional taxes on wages paid to nonresident aliens.<\/p>\n\n\n\n You must withhold Social Security and Medicare taxes from your employees\u2019 wages and pay the employer\u2019s share of these taxes, as well. These are known as Federal Insurance Contribution Act (FICA) taxes<\/a>.<\/a><\/p>\n\n\n\n Generally, all employee wages are subject to these taxes, regardless of age or whether they receive Social Security benefits. Even retirement contributions, that will lower an employee\u2019s taxable wages, are still subject to Social Security and Medicare taxes.<\/p>\n\n\n\n Please note, there\u2019s a limit on the amount of annual wages or earned income subject to taxation, called a tax cap. In 2022, the maximum amount of income subject to the Social Security tax is $147,000. Medicare tax is due on the entire salary.<\/p>\n\n\n\n As part of your payroll tax duties, you must deposit federal income taxes you withhold from your employees\u2019 pay, as well as the employer and employee portions of Social Security and Medicare taxes. You should make these federal tax deposits electronically.<\/p>\n\n\n\n Most employers use the Electronic Federal Tax Payment System (EFTPS). It\u2019s a free service that the Department of Treasury provides. You\u2019re automatically pre-enrolled when you request an EIN from the IRS<\/a>. If you don\u2019t want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or other trusted third party to make the electronic deposits for you.<\/p>\n\n\n\n There are two deposit schedules: monthly and semi-weekly.<\/p>\n\n\n\n Before the beginning of each calendar year, you must determine which schedule to use. The schedule is based on the total tax liability you reported during the last year. In the first year you have employees, you\u2019ll generally deposit taxes on a monthly basis. Under the monthly deposit schedule, you\u2019ll need to deposit employment taxes by the 15th day of the next month.<\/p>\n\n\n\n You\u2019ll also need to file Form 941<\/a>, Employer\u2019s Quarterly Federal Tax Return, with the IRS for every quarter that you pay wages subject to income tax withholding (including withholding on sick pay and supplemental unemployment benefits), or Social Security and Medicare taxes. That\u2019s unless you get a notification from the IRS saying that you can file a Form 944, Employer\u2019s Annual Federal Tax Return.<\/p>\n\n\n\n If you don\u2019t send the government required federal tax deposits, the IRS will pursue the debt, and you can be subject to tax penalties, in addition to the tax bill.<\/p>\n\n\n\n Only the employer pays FUTA<\/a>; it isn\u2019t withheld from employees\u2019 wages. For 2022, the FUTA rate is 6% of the first $7,000 of wages you pay to each employee during the year. If your business pays into the state unemployment system, the amount will lower what you pay federally.<\/p>\n\n\n\n You must deposit FUTA by the last day of the first month that follows the end of the quarter. If the due date for making the deposit falls on a Saturday, Sunday, or legal holiday, you can make the deposit on the next business day.<\/p>\n\n\n\n In addition to all the federal requirements, you must follow regulations from each state whose residents you employ, including withholding for state taxes where applicable. State requirements are usually similar to federal requirements. But states can modify their requirements, so it\u2019s critical to learn the state requirements that may apply to you.<\/p>\n\n\n\n As you can see, hiring employees for the first time is complicated \u2013 and the stakes are high if you don\u2019t get it right from a tax perspective. That\u2019s why many small business owners seek professional <\/a>bookkeeping <\/a>help<\/a>.<\/p>\n\n\n\n If hiring employees is on your to-do list, make sure your next step is to get help from Block Advisors for small business tax<\/a>, bookkeeping<\/a> services<\/a>, and employer payroll<\/a> responsibilities \u2013 so you can get back to what you love about your business.<\/p>\n\n\n\n See how we can help with your payroll needs and answer your payroll questions.<\/p>\n\n\n\n Schedule a free payroll consultation today<\/strong><\/a>.<\/p>\n\n\n\n3 \u2013 Get each employee\u2019s Social Security numbers<\/h3>\n\n\n\n
4 \u2013 Obtain a Form W-4 to withhold income taxes<\/h3>\n\n\n\n
5 \u2013 Withhold Social Security and Medicare taxes<\/h3>\n\n\n\n
6 \u2013 Deposit all the withheld taxes<\/h3>\n\n\n\n
How to make electronic deposits<\/h4>\n\n\n\n
Remember: Don\u2019t ever use federal tax deposits for other purposes.<\/h3>\n\n\n\n
7 \u2013 Every quarter pay Federal Unemployment Tax (FUTA)<\/h3>\n\n\n\n
8 \u2013 Don\u2019t forget about state tax issues<\/h3>\n\n\n\n
Hiring employees for the first time is complicated \u2013 Let us help<\/h2>\n\n\n\n
\n\n\n
![\"Block](\"https:\/\/www.blockadvisors.com\/resource-center\/wp-content\/uploads\/2022\/08\/HRB-Block-Advisors-Logo-1024x436.jpg\"){kind=logo}
<\/a><\/figure>\n<\/div>","protected":false},"excerpt":{"rendered":"