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A business owner might find the paperwork involved in hiring an employee to be intimidating, which is why many delegate those duties to a payroll service if they have enough workers to make the expenditure worthwhile.
According to Joy J. Forehand, deputy secretary of the New Mexico Department of Workforce Solutions, “entrepreneurs who do not outsource their payroll to an outside firm and choose to do it on their own need to know what state and federal laws apply to the employer-employee relationship.”
First things first
Business owners need an employer identification number, or EIN, from the Internal Revenue Service before hiring help. Each employee must fill out a W-4 form detailing how much should be withheld from her paycheck to cover her income taxes and other payroll deductions.
The Homeland Security Department requires employees to fill out an Employment Eligibility Verification Form and present the employer with a Social Security card or other government-issued identification, such as a passport, to substantiate their eligibility to work. In New Mexico, employers must report new employees to a state new-hire directory.
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