Onboarding is one of the most critical processes within a business. It can literally be the difference between keeping new hires or increasing your employee churn rate.
Studies show new employees that partake in a well-structured onboarding program are nearly 70% more likely to stay with the company for more than three years.
What this tells us is that workers are looking to join companies that are well-organized. And a part of this organization is providing all the necessary new hire paperwork to allow employees to start working ASAP.
If this is your first time hiring employees for your business, then the following will guide you along the process.
Before You Hire Your First Employee
Your business is growing faster than you can imagine, which is great. But before you start hiring employees to assist with your expansion, there are some things you need to do first.
For example, you need to apply for an employer identification number (EIN) with the IRS. This number is what you’ll use on all tax returns and other financial documents you submit to the IRS.
The process is quick, fast, and easy to do.
Next, you’ll have to register with the labor department within your state. There are state unemployment compensation taxes you must pay.
This fund offers temporary relief to laid-off workers.
It’s also required that you acquire workers’ compensation insurance in the event someone gets injured on the job. You don’t want to end up in court without it because you could potentially go bankrupt or close up shop because of it.
From here, you need a system in place to ensure all new hire paperwork is sent and signed by all employees before starting work.
Here’s a checklist of all the documents you need to have on hand.
IRS Form W-4
The W-4 form documents each employee’s tax information to ensure the correct numbers are reported to the IRS during tax season. This document also allows you to withhold taxes from each paycheck.
It’s best to have employees fill out the W-4 form every year if they’re looking to change their allowances.
For example, maybe they have more children now or are no longer married. The W-4 form collects information, such as the employee’s address, social security number, birth date, government name, dependents, marital status, and whether they qualify for earned income credit.
This is an Employment Eligibility Verification, which identifies whether an applicant is eligible to work in the U.S. All applicants must sign this form before you can hire them.
In order to verify their eligibility, you’ll have to ask for the applicant’s proof of identity and residency of the country. Proof of identification can be in the form of a state ID, driver’s license, or school ID (all must be valid).
Then for work eligibility, the applicant must have an unexpired U.S. passport, permanent resident card, temporary resident card, social security card, birth certificate, or other similar documents.
It’s important to wait for these documents to ensure you have proof to show any agencies that demand them in the future (such as an immigration officer).
Another option is to sign up for the E-Verify system (ideal for larger businesses) to quickly check the eligibility of new hires.
Job Application Form
It’s required that applicants apply for a job position using your job application form. This holds true whether they submit a resume or not.
The purpose of the job application is to collect key information about the applicant. This includes their name, contact details, social security number, prior employers, education, and so on.
There are also statements the applicant must sign, stating all information on the form is accurate (to the best of their knowledge) and that you can perform background and reference checks.
The application helps protect employers from potential fraudulent claims from employees. Plus, if you find out later that information on the form is incorrect, you can take action (i.e. firing or suing) against the employee.
Documents for State Withholding and Registration
Now, there are other entities that may want to collect money from your employees (other than the IRS). For example, your employee may have a child support obligation to pay each month.
In this case, you have to register new employees with the state’s new hire notification system. This will notify state child support agencies and allow them to deduct money from each paycheck.
Then there are some states that collect taxes from employees. In fact, there are 41 states that do so. The exempt states include Florida, Alaska, Nevada, Wyoming, Washington, Texas, South Dakota, and Nevada.
There’s a gray area in how Tennessee and New Hampshire handles state income tax. For instance, Tennessee is on the path to becoming a tax-free state, while New Hampshire doesn’t collect income tax, but does require residents to file a tax return for interest and dividend income over $2,400.
If your state collects income tax, then you’ll have to withhold this from employees’ checks, along with federal taxes.
New Hire Handbook
Again, onboarding should be seamless for all new hires. With an employee handbook, you can ensure all new hires have the information needed to get started working.
This guide can include everything from policies and procedures to tips and tricks for completing their designated tasks. You can even have employees sign the handbook, stating they’ve read it.
In doing so, it’ll become a legally-binding agreement that they read the handbook and understand what’s expected of them.
If you want to do something a bit more modern, you can always opt for a digital tutorial using a platform like Tutorialize.
Creating a Seamless Onboarding Process
Speaking of digital platforms, why not forego the whole “paper” in paperwork and go online. There are platforms you can use like Eversign that allow you to scan or import documents for employees to sign digitally.
This makes the process easier for everyone. As the employer, you can track the progress of new hires to see which forms are signed or waiting to be signed.
It’s simpler for you to monitor, track, and manage all new hire documents for as long as required by law. All the documents are in the cloud until you delete them.
Then once employees sign the new hire paperwork, you can use a tutorial platform to guide them through your software and systems. Many employees find online tutorials very helpful during the onboarding process.
Setup Your Payroll System
This is something you want to take care of before you bring aboard any new hires. You need a reliable way to record and distribute payments.
There are various systems you can use, depending on your own financial setup. For instance, if you’re a small business with a business bank account, you can issue payments through direct deposit or paper check.
It’s good to give your employees multiple options, if it’s feasible for you. Whatever you choose, be sure it’s easy to track all hours worked and paid for, as well as withholding for taxes and state withholding.
This will make tax season easier for you and your accountant.
Setup Workplace Posters
It’s required that employers set up workplace posters that educate employees about their rights. These are available for free from the Department of Labor.
It’s a good idea to contact your local state Department of Labor to inquire about the poster requirements.
These posters talk about the rights and requirements of both employees and employers under Federal employment laws.
Draw Up Necessary Contracts
Don’t forget about key contracts you may need to create for certain workers. For example, if you’re hiring contractors to work on projects, then you won’t create an employee-employer relationship with them.
You’ll need to create a contract and have them sign it, as well as a W-9 form. Other contracts or agreements you may need include non-disclosure agreements (NDA) and employee contracts.
The purpose of these contracts is to detail what the employee or contractor can and can’t do, the terms of their employment, and the length of their employment with your business.
Enrollment for Employee Benefits
If you’re offering benefits to your employees, then you’ll need a process for setting it all up. This includes having key documents enabling employees to enroll, list their dependents, and select the options they want.
Again, you can make this easier by using a platform like Eversign to send and receive digitally signed documents.
Getting Everything in Order for New Hires
With this checklist, you can ensure you’re prepared to bring aboard your first set of employees. Hiring new employees shouldn’t be a grueling process.
With the right tools and all your new hire paperwork in order, you can make everything seamless for everyone.
If you’re getting ready to hire employees for your business, then let us know in the comments how these tips help you get the job done!