Hiring - Your guide to compliantly hiring Employees and Contractors
Jun 28, 2023
Congratulations! You've found the ideal candidate to join your team. Now you need to compliantly onboard them to your team and get them ready to be paid. Whether this person is joining as a U.S. based employee or a global contractor, each path comes with its own unique administrative steps. Some of the steps can become quite complex, so remember that payroll providers like Franklin are here to alleviate the administrative burden and make payroll easy. Let's dive into the specifics.
Hiring U.S. Employees
Tax Compliance
There are a few key components to setting up W2 workers:
EIN (employer identification number)
State tax employment number (for each state where you have employees)
Once you have these key components which are fairly trivial to apply for, it is simple to enter them into Franklin to get your employees onboarded in a compliant manner. We will have you and your employees fill out all of the requisite employment forms in app, as well as set the pay frequency and amount. Once this initial setup is completed, your payroll will run automatically going forward, with Franklin managing all of the quarterly and annual tax filings on your behalf. The Franklin team is here to help every step of the way
Benefits Enrollment
As an employer, you're required to provide certain benefits like Social Security taxes, Workers' Compensation, and in some states, Disability Insurance. Under the Affordable Care Act, employers with 50 or more full-time employees are required to provide health insurance. To add some extra allure to your job offers, consider optional benefits such as retirement plans, wellness programs, and even stock options or token grants. Franklin can seamlessly integrate and help you apply for a variety of these programs if you need or want to offer them to your team. Learn more about administering benefits through Franklin. Often a step in administering benefits is withholding a portion of the employee's paycheck to be used towards the benefit.
Hiring Contractors
Tax Forms
Understanding the tax classification of your contractors is important for year end filings. Depending on the type of contractor, you will need to collect:
W9 for US based contractors
W8-BEN for individual foreign contractors
W8-BEN-E for foreign contracts with corporate entities
No taxes need to be withheld from contractor payments as it is the responsibility of the contractor themselves to be making their own estimated tax payments.
For U.S. based contractors paid over $600 per year, Franklin will generate 1099s for them on your company’s behalf.
Classifying Contractors v. Employees
There are a few standards to look at when determining if a worker should be classified as an employee or a contractor. If you incorrectly classify a worker as a contractor when they should be an employee, it would mean that your company could be responsible for back taxes and perhaps a fine from the department of labor. Here is the criteria to evaluate:
To learn more about using Franklin or about the differences between employees and contractors, reach out to us. Or stay tuned to our Twitter, LinkedIn, and website.
