Many Idaho entrepreneurs starting their own business are faced with uncertainty about what is legally required when they are ready to hire their first worker, and they are concerned with the risks that come with being an employer. Following these steps will help you get on the right track, but a skilled lawyer will be able to walk you through the process and ensure that as your business grows, you are following the legal requirements for hiring and retaining employees.
1. Get an Employer Identification Number (EIN) from the IRS.
To legally hire employees, you will need to obtain an EIN, which identifies you as a business entity, from the IRS. You may apply for an EIN online. The IRS website has further instructions if you want to apply for an EIN by other means.
2. Obtain Workers’ Compensation Insurance for Employees.
State and federal law also requires that certain employers obtain workers’ compensation insurance for their employees. Idaho requires that employers with one or more full-time, part-time, seasonal, or occasional employees are required to maintain a workers’ compensation policy (unless specifically exempt from the law) and that the policy is required to be in place before the first employee is hired.
3. Complete Form I-9.
Federal law requires every employer complete the U.S./ Citizenship and Immigration Services Form I-9. This form is used to confirm that an employee is authorized to work in the U.S. and specifies what documents the prospective employee must present to the employer to verify their eligibility to work in the U.S. This form applies to citizens and non-citizens alike.
4. Properly Classify Your New Hire.
Employers can be faced with fines, audits, back taxes and back wages if they misclassify employees as independent contractors, so it is important to get it right at the beginning of the relationship. Although a full discussion is outside the scope of this article, both the IRS and the Idaho Department of Labor offer guides to determine how to define a worker as an employee or an independent contractor.
5. Report New Hires to the Idaho Department of Labor’s New Hire Directory.
Under Idaho law all Idaho employers are required to report their new hires to the Idaho Department of Labor within 20 days of the date of hire. This may be done online, but if you are a new user to the system, you will need to first contact firstname.lastname@example.org to set up access to the system.
6. Post Required Notices.
Idaho requires all employers to display several federal and state labor posters in the workplace. These posters may be obtained online from the Idaho Department of Labor.
If your business is ready to grow, or if you are not sure whether you are in compliance with the law, reach out to Roberts Law, so we can assist you in wading through the process of preparing for and complying with the employment law landscape. We can help in many business legal matters from entity creation to exit strategies and everything in between.