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Just bought a business, hired an employee...Where do I start?

by hschiel, Window Shopper

  • Created: November 23, 2010, 12:36 pm
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6 comments

I bought a business and will hire one employee.  I've obtained my state and federal ID numbers.  I know that I need to file taxes on gross receipts.  But how do I go about setting up paying taxes on my employee?  I'm in the state of New Mexico and I know that there is a 2% rate for unemployment insurance.  But how do I withold for the employee?  I have no idea where to start.  If I give my employee a W-4, what do I do with it?  I have absolutely no experience with any of this, but I would like to do the books myself.  Is there a step by step guide to getting all of this paperwork out of the way?

Tags: Discuss Popular Topics, Starting & Registering a Business
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attard | Performer | 11/30/2010 - 9:41 am

Although you'll pay a fee, the easiest option for handling payroll taxes on employees (and on your own salary if your business is incorporated) is to use a payroll service.   Another option is to buy software that will let you determine the payroll taxes, submit them yourself, and then prepare (or have your accountant prepare) quarterly tax statements.   In addition to payroll taxes, you need to check with your state to see if you are required to have workers compensation and /or disability insurance for your employee.   This, too, is information your accountant can provide. 
Professional Web Site: http://www.BusinessKnowHow.com

JimD | Former Moderator | 11/29/2010 - 11:32 am

For more information on EFTPS, check out this article: Paying Your Business Taxes Can Be Easier JimD

phanio | Contributor | 11/29/2010 - 11:09 am

There are all types of accounting programs and payroll programs that you can buy - that will walk you through the calculations and such. But, there is a thing with the IRS called - EFTPS - which allows you to make your payments (monthly or quarterly) online. Here you can pay yours and your employee's Social Security Taxes and FICA. Lastly, the IRS itself can walk you through both this process as well as how to calculate your and your employees taxes. For state taxes, look to your comptrollers office.
Professional Web Site: http://www.businessmoneytoday.com/

riverasierra | Window Shopper | 11/27/2010 - 9:21 pm

My best recommendation is that you buy Quickbooks, the premier small business accounting system. It actually is pretty intuitive and will run you step by step throught the withholding and tax payment process.
José A. Rivera, JD President & CEO Rivera, Sierra & Company, Inc. jrivera@riverasierra.com

NicoleD | Former Moderator | 11/27/2010 - 1:13 pm

@hschiel - This guide lays out ten easy steps for new employers to follow, including the Social Security Administration's Employer W-2 Filing Instructions and Information . Take a look and if you have questions, please post them here. Best of luck to you and your new venture!

BizResearcher | Window Shopper | 11/24/2010 - 7:55 am

If you applied for a federal EIN, the IRS will send you the necessary documents to withhold federal taxes. Your state department of labor is usually the agency to whom you pay state withholding. If you check their web site, you should find a form to fill out and submit. Also check with your state revenue department. You will also need to obtain workers comp insurance when you have an employee. For help in getting started, you might want to talk with a counselor at a small business development center or a SCORE office. Their services are free and they can help you set up everything properly and be sure nothing is forgotten.