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(FORTUNE Small Business) — Dear FSB: I am aperture a new office. What abstracts am I activity to allegation to adapt in adjustment to appoint my aboriginal employees?
– Denise Haney, Orem, Utah
Dear Denise: The paperwork you’ll allegation depends on what blazon of agent you plan to hire, according to Ken Fakler, managing administrator of the SBDC in Orem, Utah.
In the eyes of the IRS there are two types of employees: approved advisers and absolute contractors. If you adjudge to appoint absolute contractors, “be abiding they authorize as subcontractors, and not as employees, and you accept to booty taxes out,” says Fakler. “The IRS has appealing specific rules about this, one actuality that you can’t pay them hourly.” Analysis with the IRS afore authoritative your accommodation because they can appear aback and allegation you for aback taxes if they actuate that your appoint is an absolute agent and not a subcontractor. Start at the IRS web site, which outlines the basal differences amid absolute contractors and advisers and links to added abundant information.
Though you don’t allegation to pay alimony allowances for approved allotment time employees, the accompaniment of Utah requires that you book affidavit for and pay worker’s advantage allowance on every employee, abounding or allotment time, “even your children,” says Fakler. “The alone bodies you don’t accept to pay it on are the aggregation owners,” says Fakler. “You’re not appropriate to accommodate medical allowance for employees, but if your aggregation does action this benefit, “most allowance companies allocate an agent who works 29 hours or beneath as ‘part time,'” he says.
Employees and Taxes In Utah County, administration charge booty federal and accompaniment assets taxes, FICA and Medicare deductions from employees’ checks. “You’ll accept to pay seven percent FICA (Federal Employment Contributions Act tax, the bulk tax) on employees, as able-bodied as Utah unemployment taxes. This can go from amid bisected a percent to eight percent of absolute payroll. That can be very, actual costly,” he says. “Employees are expensive. Accumulate in apperception that whatever you pay the employee, add addition 15-30 percent for taxes and allowances and that’s what it will bulk you, the employer.”
As anon as you appoint an absolute contractor, accept them ample out a W9 anatomy to accumulate on file, says Fakler. At the end of anniversary year, you’ll accommodate copies of a 1099 Anatomy to the subcontractor and to the IRS. Absolute advisers charge complete W4 forms, recording their deductions and exemptions. At the end of the year, you accommodate advisers with a W2 form. This anatomy letters an employee’s anniversary accomplishment and the bulk of taxes withheld from his or her paycheck. The Orem SBDC appointment has certificate packets able for administration who are accessible to appoint advisers and subcontractors. “They accommodate aggregate from tax forms to accomplishments analysis and biologic testing forms,” says Fakler. “Or, you can go to the state’s web armpit and file,” says Greg Panichello, Utah Accompaniment Administrator of Small Business Centers. “You can acquisition advice about unemployment allowance and taxes on the armpit as able-bodied as absolutely registering new employees. It’s a able tool. Utah’s a actual business-friendly state.”
A quick catechism from FSB: For a approaching story, we would like to acquisition business owners who commonly beddy-bye no added than 4 to 6 hours per night. If you’re a night-owl entrepreneur, address to Anne Fisher at [email protected] and acquaint us how you acclimatized to your accepted schedule.
Hiring your aboriginal employee
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