26 Jun How to Hire Employees in the United States: The Ultimate Guide
Since the beginning of the pandemic, over 40 million Americans have filed unemployment claims.
What does this mean for you, a savvy business owner? As the country reopens and we take steps to rebuild the economy, more people than ever will be looking for a new job.
Before you jump in and begin to hire employees, however, there’s a long checklist of items to consider.
How much do you know about determining worker eligibility in the US? Do you know which tax forms for new employees you’ll need? What about onboarding foreign workers? And how will you find time to handle employee payroll, taxes, and other administrative tasks?
In this post, we’ll answer those important questions and more.
(Please note: The information in this article is designed to help you with employee onboarding, but it’s not a substitute for legal advice. If you have any questions, it’s best to consult with a lawyer or your state’s Department of Labor to ensure you’re in full compliance.)
Are you ready to hire employees and grow your business? Read on to learn all about the hiring process and how to hire workers in the US.
Hiring Employees: Basic Requirements
So, your dream candidate walked through the door and nailed their interview. Now what?
Let’s start with the information you need to collect during the hiring process.
Eligibility to Work in the US
Every employer must complete an I-9 Employment Eligibility Verification form for every new hire. This is a requirement for both citizens and non-citizens.
The employee must provide documentation that they’re legally able to work in the US. If they’re not a US citizen, they’ll need to provide one of the following:
- Alien registration number (USCIS number)
- Form I-94 admission number
- Foreign passport number
It’s your responsibility to ensure their documents are genuine and acceptable as proof of eligibility. You’ll need to retain a copy of the completed forms for your employee records.
Employee’s Social Security Number (SSN)
Each employee (residents and non-residents) must provide their social security number. Ask to see their social security card and make a photocopy of it for your records.
If you have any concerns about authenticity, you can use the SSA’s number verification service to ensure the number is valid. Any applicant who can’t present a social security card will need to apply for one before you can hire them.
Bonus tip: Beware of unknowingly accepting an ITIN number in place of a social security number. These are given to non-residents who need the identification for tax purposes but are not eligible to work in the US. All ITINs are 9-digit numbers beginning with the number “9.”
Another form you need to collect when you hire employees is the Form W-4 Employee’s Withholding Certificate. You’ll use this information to determine how much income tax to withhold from each paycheck.
Any exemptions the employee wants to claim must be based on their filing status (i.e., single, married, number of dependent children). The W-4 remains valid until you receive a new one from your employee.
Important note: If the employee claims any exemptions from withholding income tax, they’ll need to submit an updated W-4 each year.
Hiring Process Checklist
Before you hire employees, you need to make sure your business is in full compliance with federal, state, and local laws.
If you haven’t already, you’ll need to register your business and obtain an Employer Identification Number (EIN). If you’ve set up your business as a partnership or corporation, you should already have one.
Used for tax purposes, your EIN basically acts as a social security number for your business. Different states have different requirements and ways to apply, so find out what you need to do in your locale. This is also the time to determine how you’ll handle payroll and employee benefits and how to meet worker’s compensation requirements.
Next comes the paperwork you’ll need before you can hire employees. These include the tax forms listed above (W-2 and W-4), as well as a state withholding form if applicable to your state. You’ll also need to decide if you want to hire workers as employees or independent contractors.
After you’ve completed interviews and narrowed down candidates, they need to present documents proving they’re legally able to accept work in the US. If you (even unknowingly) hire employees who aren’t eligible to accept a job in the US, you could face fines or criminal charges.
To ensure the safety of your staff, your customers, and your business, you may also want to order a background check. Experts estimate that 85% of applicants lie on their resumes, so you want to make sure your applicant is who they say they are.
Once the new employee is officially hired, you’ll need to report their information to your state’s labor agency. You’ll also report your payroll taxes on a quarterly or annual basis.
Here’s a quick checklist of these points you can refer back to anytime:
- Get your EIN number
- Consider options for payroll and employee benefits
- Get worker’s compensation insurance
- Gather tax forms for new employees
- Verify employee’s eligibility to work in the US
- Run a background check (optional)
- Submit completed new hire forms to government agencies
If this feels like too much to handle on your own, keep in mind you don’t have to go through the hiring process alone. Professional direct hire staffing services can make your life easier by screening and hiring the best candidates for you.
Payroll, Taxes & Social Security for J-1 Visa Holders
Until now we’ve focused mainly on hiring US citizens, which is a fairly straightforward process. What if you have the opportunity to hire a foreign worker, such as an exchange student in the US on a J-1 visa?
Even though they’re not citizens, they still need to obtain a social security number and pay federal, state, and income taxes. (They are exempt from paying Social Security, Medicare, and federal unemployment taxes.)
Many aspects of the hiring process are the same, but there are a few differences to remember when you hire employees who aren’t US citizens.
As long as the student can provide proof that they’ve applied for a social security number, you may hire them. As soon as they receive their social security card, you’ll need to update your employee records—but more on this subject later.
If the student is late in filing for their social security number, they should include the form SS-7028 with their application. This authorizes the SSA to send their number directly to you, the employer, as soon as it’s issued.
The student may need guidance on how to fill out their W-4. Let them know:
- Not to use the Personal Allowances Worksheet
- Select “single” for marital status in Line 3 (even if they’re married)
- Claim “1” withholding allowance on Line 5
- Add “Nonresident Alien” or “NRA” above Line 6
- Not to claim any exemptions on Line 7
It will be your responsibility to send the appropriate W-2 statement to the student at the end of the tax year, even if they’ve already returned to their home country. If their employment spans two tax years, you’ll need to send a W-2 for each year.
Tax withholding for foreign students works differently than usual too. You’ll need to add a certain amount to their wages before you calculate the correct withholding amount (federal taxes only). To determine these amounts, check Publication 15 for the latest requirements.
Employer Responsibilities When Hiring Foreign Workers
Would it surprise you to learn that 17% of the American workforce (over 27 million people) are foreign-born workers? As long as you understand the legal requirements, there’s no reason you can’t bring a foreign worker onto your team.
A social security number is often the biggest hurdle to those seeking a job in the US. And because the SSA tries to ensure that only those who truly should receive a number get one, delays are common.
It may take weeks or even months from the time your employee applies for a number until they receive it. This is because the SSA has to verify the applicant’s documents with the Department of Homeland Security
The good news is that—as long as the application is submitted and active—the individual is allowed to work for you.
So then, what are your responsibilities as an employer hiring a foreign worker? Once you have proof they’ve applied for a social security number, collect the following information for your records:
- Employee’s full name
- Date of birth
- Place of birth
- Current address
- Parent’s full names (including mother’s maiden name)
- Date of social security number application
With this information, you can legally hire the employee, keeping in mind you’ll need to update your records once the number comes in.
What happens if the social security number hasn’t arrived by the time your tax forms (W-2s) are due? If you’re filing on paper, simply write “applied for” in Box A on the employee’s W-2. Electronic filers should enter all zeroes (000-00-0000) in the field for the social security number.
Here’s another scenario: What if your foreign worker receives their social security card after you’ve filed your wage report? You’ll need to file a W-2c Corrected Wage and Tax Statements form to include the new number.
Can You Hire Employees Without a Social Security Number?
We’re into the home stretch now, so let’s address one more common question about hiring workers in the US.
Let’s say you find an outstanding candidate who doesn’t have a social security card. Or maybe a foreign exchange student applies for a seasonal or temporary position with your company. Can you hire them if they don’t have a social security number?
The short answer is no—but it is possible to turn that “no” into a “yes.” If you want to hire the individual, there are steps you can take to legalize their work status.
Start by asking them to submit an application for a social security card. Once they’ve done so, they can obtain a letter from the Social Security Administration stating that their application is in process.
When you have all this necessary information, the employee may legally begin working for you. Once they get their social security card, you’ll need to update your records with the new information. Have the employee fill out an I-9 form and any other new hire paperwork.
What happens if the application for a social security number is denied? In that case, the individual cannot legally work in the US—or for your company.
Scion Staffing Payroll Services: We’re Here to Help
As you can see, there are many factors to consider whenever you hire employees.
Determining the worker’s eligibility is only the beginning. As an employer, you have a long checklist of items to tick off during the onboarding process. There are also special considerations to make for workers who are foreign-born or those who don’t have a social security number.
As your business grows, you’ll need to consider how to handle payroll, taxes, and other back-office tasks. If you feel overwhelmed by all the duties you have to juggle, don’t worry—help is available.
Our payroll and employee of record staffing services are designed to streamline the way you run your company. From onboarding and handling payroll to employee benefits and worker’s compensation, we’ll manage those time-consuming tasks so you’re free to focus on your business.
Does this sound like the answer you’ve been searching for? Give us a call at 888-487-8850 or use our online form to request more information.
We look forward to hearing from you.
Please note: The information in this article is not legal advice. Please consult with a lawyer and or your state’s Department of Labor to ensure you’re in full compliance.