The goal of any business is growth, and a lot of times that growth will result in the need to hire help. Finding and retaining good talent is one issue, but there are steps that must be taken before and when hiring employees.
- Obtain an Employer Identification Number (EIN): Before hiring your first employee youmust obtain an EIN from the IRS.
- Register your business with your state: Most states require you to register if you conduct business in that state to determine if and what types of state taxes the business will be required to pay.
- Assess the employee’s eligibility to work in the United States: You must verify each new employee is legally eligible to work in the US. You must have the employee fill out Form I-9 Employment Eligibility Verification
- Get each employee’s Social Security Number (SSN): You should ask your employee to show you his or her social security card. Do not accept an ITIN in place of a SSN. An ITIN is only available to resident and nonresident aliens who are not eligible for U.S. employment.
- Have employee complete federal and state withholding documents: To know how much income tax to withhold from employee’s wages, you should have a Form W-4 on file for each employee. Ask employees to complete this when they start work. If a new employee does not give you a completed W-4, withhold tax as if he or she is single, with no withholding allowances.
- Register with your state’s New Hire Reporting Program: All employers are required to report newly hired employees to a state directory within 20 days of their hire date.
- Obtain Worker’s Compensation Insurance: All businesses with employees are required to carry workers compensation insurance through a commercial carrier, or through their state’s Workers Compensation Insurance program
- Post required Notices: Employers are required to display certain posters in the workplace that inform employees of their rights and employers responsibilities under labor laws.
- File and Pay your taxes:Employers who pay wages must file IRS form 941 and 940, and the applicable state income and unemployment withholding tax forms.
Be sure to stay current with the applicable laws that govern the employer-employee relationship. Keep all forms in a safe place and maintain all employee files for at least 5 years after employment termination.
Some additional rights employers should be aware of are included below:
At the time of hiring, new employees must be notified of their rate of pay and the usual time and place of payment. When possible, the notification and an acknowledgment by the employee should be in writing. Employers must also give advance notice to employees of any changes in pay arrangements
The Illinois Human Rights Act prohibits employers with 15 or more employees from discriminating against applicants or employees on the basis of race, color, religion, sex, national origin, ancestry, age, order of protection status, marital status, disability, military status, sexual orientation, unfavorable discharge from military service, or arrest record or criminal history record that has been ordered expunged or sealed, citizenship status, or pregnancy. The Act covers employers with 15 or more employees, except for provisions prohibiting disability discrimination and sexual harassment, which cover all employers (IL Comp. Stat. Ch. 775 Sec. 5/1-101et seq.).
The Employee Credit Privacy Act prohibits employers in Illinois from requesting or obtaining the credit history or credit report of an applicant or employee and from discriminating against an individual because of his or her credit history or credit report (IL Comp. Stat. Ch. 820 Sec. 70/1). The Act applies to all public and private employers in the state, but provides exceptions for insurance companies, law enforcement agencies, debt collectors, certain government agencies, and financial institutions such as banks and credit unions. Subject to certain exceptions, employers may inquire about an individual’s credit history if a satisfactory credit history is a bona fide occupational qualification.
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