New Hires: What You Need to Know
Download the New Hire Packet
Your employee should fill out the packet, keep the portal pages for themselves to keep, you scan the rest of the packet and save as a PDF. Securely upload here: Click Here
Employers: To stay legally compliant you need to have the following forms on file:
W-4 (Federal Tax Withholding)
IT-4 (Ohio State Withholding)
I-9 (Employment Eligibility Verification)
A copy of two forms of ID as explained in the full I-9, typically Driver’s License/State ID and a social security card.
DO NOT let employees or contractors start work without proper documentation. If you fail to collect the right forms, you could be liable for taxes and penalties.
Hiring a Minor
The minor needs to fill this out: Click Here
Ohio Code: Click Here
There are positions that minors cannot work in like serving alcohol. Please meet with your lawyer before hiring any minor.
Timekeeping & Approving Timecards
Employees clock in/out via their secure online portal.
Timecards must be approved by employers 4 days prior to pay date.
Managing Vacation Time
We can automate vacation accruals! Example policy:
Earn 1 hour of vacation for every 40 hours worked.
Set a max accrual limit and carryover rules.
OR
Most clients do prefer to just credit a week’s worth of vacation time at the beginning of the year and if not used by the end of the year pay it out. We can manually change the balances at the beginning of each year and once the hours are used they cannot be used again.
1099 Compensation
W-9 (For Independent Contractors)
DO NOT let employees or contractors start work without proper documentation. If you fail to collect the right forms, you could be liable for taxes and penalties.
When is it okay to pay a person 1099 compensation instead of W2 wages?
A business can hire a 1099 contractor (independent contractor) instead of an employee when certain conditions are met. The distinction between an employee and a contractor is critical because it affects tax reporting, withholding, and compliance obligations. Here are the key factors to consider when determining whether it is appropriate for a business to hire a 1099 contractor:
1. Behavioral Control
The business can hire a contractor if it does not control or direct how the work is performed. This includes:
When and where to work (e.g., contractors set their own schedules).
What tools to use (contractors typically supply their own tools).
Training (contractors usually rely on their expertise and don’t receive detailed training from the business).
2. Financial Control
The contractor must have a degree of financial independence. This includes:
Contractors being able to seek work from other clients or businesses.
Contractors having the potential for profit or loss (e.g., they might incur business expenses for which they are responsible).
The contractor typically being paid per job or project, rather than receiving a regular wage or salary.
3. Relationship of the Parties
The nature of the relationship should align with the contractor model:
Contractors typically have a written agreement (e.g., an independent contractor agreement) stating they are not employees.
Contractors do not receive employee benefits such as health insurance, retirement plans, or paid time off.
The engagement is typically for a specific project or defined period, rather than an indefinite, ongoing relationship.
4. IRS Guidance on Independent Contractor Status
The IRS uses a “Common Law Rules” test that considers:
Degree of control and independence. If the business exercises significant control over the work process or treats the individual as an employee, the IRS may reclassify the individual as an employee. This could result in penalties for the business.
When is it NOT Appropriate to Use a 1099 Contractor?
If the worker performs duties integral to the business on an ongoing basis.
If the business provides training, tools, and detailed instructions.
If the worker is economically dependent on the business (i.e., they rely on a steady paycheck).
If the worker is expected to work exclusively for the business.
Why It Matters
Misclassification of employees as independent contractors can lead to:
Back taxes for employment taxes (Social Security, Medicare, unemployment).
Penalties from the IRS or Department of Labor.
Potential lawsuits for unpaid wages or benefits.