When your business takes off and you have more work than you can do, consider hiring your first employee.

Here are eight steps from SCORE and the Small Business Administration on what to do to comply with federal and Arizona regulations.


1. Obtain an Employer Identification Number (EIN), also known as an Employer Tax ID or Form SS-4, from the U.S. Internal Revenue Service.

2. Set up records for withholding taxes. For federal income tax withholding, employees sign a withholding exemption certificate, Form W-4 and employers submit Form W-4 to the IRS; employers annually report wages paid and taxes withheld on Form W-2 to the federal government in a federal wage and tax statement (plus send Copy A of the W-2 forms to the Social Security Administration as well as to your employee (go to SSA.gov for dates and details).

For Arizona state taxes, employers withhold Arizona income tax from the payment of wages for compensation for services performed in Arizona, and new employees complete Arizona Form A-4 available on AZDOR.gov.

3. Federal law requires employers to verify an employee’s eligibility to work in the U.S. and complete Form I-9 (employment eligibility verification) attesting to the confirmation. Employers can use the information on Form I-9 to electronically verify the employment eligibility of a new hired employee by registering on E-Verify (www.uscis.gov/e-verify).

4. Report newly hired employees to the Arizona New Hire Reporting Center (az-newhire.com).

5. Obtain workers’ compensation insurance coverage through a commercial carrier, on a self-insured basis or through the Industrial Commission of Arizona.

6. Arizona law requires small businesses to display posters in a place where employees will see them easily. Required posters (English/Spanish) can be downloaded free from the Industrial Commission website. The U.S. Department of Labor provides a Web page on workplace poster requirements for small businesses.

7. Develop a job description for each employee that outlines the major duties and specific job expectations along with skills and qualifications required.

8. Write an employee handbook for your business: workplace rules and policies you want your employees to follow.

Originally published at Arizona Daily Star. Written by Diane Diamond. Photo credit flazingo_photos via photopin cc.