How To Hire a Full-Time Employee for Your Small Business
Hiring an employee to work full time at your business requires more than making a verbal job offer. Certain information needs to be secured for the employer’s records. Here’s what employers need to know about identifying full-time employee status and the forms employees need to complete in order to work in a full-time capacity.
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Who Is a Full-Time Employee?
According to the IRS, there are two methods for determining full-time employee status. These include the monthly measurement method and the look-back measurement method.
Monthly Measurement Method
Under this method, the employer determines if an employee is a full-time employee on a month-by-month basis. The employee must have at least 130 hours of service for each month.
An hour of service is defined by the IRS as each hour for which an employee is paid, or entitled to payment, for the performance of duties for the employer. This includes each hour for which an employee is paid, or entitled to payment by the employer for a period of time during which no duties are performed such as vacation or holidays.
Look-Back Measurement Method
Under this method, the employer may determine the status of an employee as a full-time employee during a stability period. This period is based upon the hours of service of the employee in the preceding period, which is referred to as the measurement period.
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Forms for Full-Time Employees
Employers planning to hire full-time employees need the employee to fill out the following paperwork before they may be a full-time employee with the business.
Form I-9, Employment Eligibility Verification
By completing this form, the employee verifies their right to legally work in the United States.
Employee’s Social Security Number (SSN)
Employers are required to get each employee’s name and Social Security number (SSN) and enter them on Form W-2, according to the IRS. An ITIN may not be accepted in place of an SSN for employee identification.
Form W-4, Employee’s Withholding Certificate
Employers need to have a signed Form W-4 on file for every full-time employee they hire in the business. This document ensures they know how much income tax to withhold from the employees’ wages. The form should go into effect with the employee’s first wage payment. If new full-time employees do not give their employer a completed Form W-4, the employer will withhold tax as if the employee is single.
New full-time employees may receive, and be asked to sign, several other documents.
Some of these may include an official job offer letter for the employer’s records, a data form with the employee’s personal information (also for the employer’s records), payroll tax forms specific to the state of employment, insurance forms including health insurance and workers’ compensation, an employee manual and any other required documents.
The employer will also need to submit a report of a new employee to their respective state’s reporting program and provide the state with their payroll tax number, employer identification number (EIN) and personal information from the employee from their data form.
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