Becoming an employer for the first time can be a head-spinning experience. You have to assume responsibility for various things that directly impact other people's physical and financial well-being. Failing to do your due diligence in these areas can result in a litany of potential problems.
Given this importance, let's review the fundamental responsibilities with which any new employer should be familiar.
If you're going to pay employees, you must have a solid grasp of payroll fundamentals. Employee withholding tax, also known as income tax withholding, is an amount of money an employer must deduct from an employee's wages or salary and pay to the government on the employee's behalf. This tax funds various government programs, including Social Security, Medicare, and federal income taxes.
When hired, all employees must complete an Employee's Withholding Certificate (Form W-4). The amount of employee withholding tax deducted from each paycheck depends on the employee's wages or salary, the employee's tax filing status, and any exemptions or deductions claimed on the employee's W-4. Employers are required to use tax withholding tables provided by the Internal Revenue Service to determine the appropriate amount of tax to withhold.
If the potential complexity of payroll tax withholding seems daunting, you're not alone. Many employers use a payroll service to manage payroll taxes.
Workers' Compensation Insurance
Workers' compensation is a type of insurance that provides financial benefits to employees who are injured on the job or who suffer from a work-related illness. These benefits may include medical treatment, lost wages, and disability payments.
Workers' compensation laws vary by state, but most require employers to carry workers' compensation insurance for their employees. This insurance is typically provided through a private insurance company, although some places have a state-run workers' compensation program.
Whether or not you are required to provide health insurance to your employees depends on the size of your business and the laws of your state. Under the Affordable Care Act (ACA), businesses with 50 or more full-time employees are required to offer health insurance to their employees or face a penalty. This requirement is known as the employer mandate.
However, businesses with fewer than 50 employees are not required to offer health insurance under the ACA. In some states, however, small businesses may be required to offer health insurance to their employees through state-mandated small business health plans.
It's important to check with your state's insurance department or a qualified attorney to determine whether you are required to offer your employees health insurance and understand your obligations under the law.
Safety Regulations and Disability Access
In the United States, the Occupational Safety and Health Administration (OSHA) is tasked with ensuring employees operate within a safe workplace. Business owners are mandated to comply with OSHA regulations. Some of the most important ones include:
Businesses that violate OSHA regulations can be fined or even shut down, so it's important to familiarize yourself with these mandates.
In addition, the Americans with Disabilities Act requires that businesses give disabled applicants the same consideration they would give to anyone else—along with on-the-job accommodations that do not impose undue hardships. This law also mandates that those with disabilities be given fair consideration when it's time for promotions, bonuses, and benefits.
Starting a new business comes with a whirlwind of responsibilities, but it also provides numerous benefits. If you’re ready begin that journey, you can easily open an America First business account by clicking here. It's critical, however, to treat these responsibilities with grave seriousness. Your employees will be relying on you just as much as you rely on them, and failure to meet your obligations under the law can carry significant penalties.