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By Debbie Gregory. 

If you’re hiring your first employee, congratulations! It’s important to start off on the right foot as an employer by making sure you follow all of the legal rules that now apply to you.

First of all, make sure you obtain your employer identification number (EIN) from the IRS. Next, go to the Department of Labor’s website for a list of state unemployment insurance tax agencies. Make sure you have workers’ compensation insurance. Keep in mind that being an employer carries a number of new obligations and one of them is payroll taxes. There are some misconceptions about these taxes which are clarified as follows:

You may think that all tax-free fringe benefits are exempt from taxes, but the reality is that tax-free benefits for your employees such as 401 (k) contributions, company-provided cars, adoption assistance and dependent care assistance are subject to some employer paid taxes including FICA and FUTA taxes.

You may also be tempted to transition employees into independent contractors in order to save money, but the reality is that the IRS and other government agencies have strict guidelines that must be adhered to. By definition if you control when, where, and how work gets done, you’re likely dealing with an employee. An independent contractor is usually free from the control and direction of the hirer, works outside of the usual course of the hiring entity’s business, and performs the same type of work for others.

Don’t think that outsourcing to a payroll service provider relieves you of the liability for computing payroll taxes, withholding them from employees’ paychecks, remitting payroll taxes to the government, and filing employment tax returns. The ultimate responsibility is yours, so choose wisely. With this said, it is generally a good idea to use a reputable payroll service and well worth the cost.

You must deposit federal income taxes withheld including both the employer and employee share of FICA with the U.S. Treasury using the Electronic Federal Tax Payment System (EFTPS). Also, deposits are required for FUTA tax for the quarter within which the tax due is more than $500. If you are working with a reputable payroll service, they will handle this for you. Below is a list of some of the biggest payroll companies to consider:

· ADP

· Paychex

· Deluxe

· Intuit Quickbooks Payroll

· Gusto

· Square

· Paycor

· Zenebits

Veteran and Military Business Owners Association, VAMBOA,