Over the next few blog posts, I will be covering HR topics that are tailored toward the needs of small businesses. This first post focuses on the employee file. As a small business, you will need to set up an employee file for each employee that you hire. There are several items that need to be included in the employee file – planning ahead of time can ensure that you are compliant while also providing a smooth experience for your employees.
Every employee must fill out certain paperwork and forms on the first day of employment. Many of these forms can also be filled out in advance which helps to streamline an employee’s first day. These forms consist of a combination of federal forms that are required for all businesses and additional state-specific forms. I’ll break down the different types of forms below and provide some additional helpful tips and tricks.
I9 form
The I9 form must be filled out by all new employees. There are two sections that need to be completed – the employee fills out section 1 and the employer fills out section 2. The USCIS (United States Citizenship and Immigration Services) is a great resource for more information regarding I9 forms.
They also provide a list of acceptable documents that an employee can present. I recommend sending the list to new employees ahead of time so they feel prepared when they show up on their first day.
W4
The W4 is another form that must be filled out by all new employees and determines how much will be withheld from an employee’s paycheck for taxes. Employees will need to know how many exemptions they will be claiming – this is not something that the employer can answer for them.
An employee’s exemptions may change during the year. If so, a new form will need to be filled out and the most recent version must be kept on file. The IRS is a great resource for more information on the W4. Particularly helpful are the FAQs for employers and the Tax Withholding Estimator for employees.
State forms
In addition to the W4, different states may require additional forms for tax withholding. These forms will be filled out just like the W4 and kept on file.
As with the W4, an employee may update the form during the year and the most recent version must be kept on file. The IRS has compiled a list of helpful links for each state here.
Direct deposit
Most companies opt to pay their employees via direct deposit. A new employee will need to fill out an authorization form. This form usually requires a bank routing number and personal account number. It is helpful to let an employee know that this information is needed to fill out the form.
Traditionally, account and routing numbers were found on paper checks, but as mobile payment has become more popular people are less likely to carry checks and a new employee may need to get this info directly from the bank.
Benefits
If you are going to offer your new employee benefits (medical, 401k, etc.) there will be additional forms to fill out. This is not necessary to have completed on the first day of employment but it is good to give new employees an explanation and cover what information is needed to complete the forms.
This will include the names of any additional family members and the plan the employee would like to select (if there is more than one option).
Emergency Contact
This step is easy to overlook; however, since emergency situations are unpredictable, it’s best practice to get this information with the rest of the new employee paperwork.
Additional employee information
It’s important to note that there are a couple of types of forms and information that need to be kept on file but separate from the general employee file. This includes any information related to background checks and drug screens.
Also, any medical records or information relating to a leave of absence should be kept separate from the general employee file.
Tips and tricks for creating an employee file
Create a checklist: As you can see there are quite a few forms that need to be filled out by each employee. A checklist will ensure that you never miss a form.
Always check with local, state, and federal requirements: I’ve included links to a few resources above but there are many others. It’s important to stay up to date with any changes that happen during the year to ensure that you remain compliant.
Set up a filing system early on: Setting up a filing system early on saves a lot of time down the road. This includes everything from the system you want to use to an organized naming convention for files. Many companies use an HR Information System (HRIS) and several are specifically designed for small businesses.
As your business grows, the process for creating an employee file will need to scale. At Alpine Talent Partners we are here to partner with you to make sure you are set up for success. The employee file is just the first step – reach out to find out how we can help support all of your HR needs!