When you hire your first employee, their first day on the job, they are expecting a new hire packet with a number of documents in order to be recognized as an employee, to receive pay, and to secure employee benefits. But what kind of forms do new employees typically have to fill out?
Typically when we say "employee" we mean one very specific thing; someone who is hired by a company as a W-2 employee, who receives benefits and has tax withheld from their paycheck. However, in the increasing popularity of the gig market, many people consider contractors employees even though they are 1099 hires with no benefits and no tax withholding. Whether you are hiring a contractor or employee determines what paperwork the IRS needs for reporting.
If you're hiring a W-2 employee with tax withholding, you'll need to be sure they fill out three specific documents.
1099 contractors only need one document, technically to qualify, but ideally, you should have both:
Direct deposit forms make it easy to pay employees by depositing their paycheck automatically and electronically to their bank account when payroll is processed, versus having to receive a paper check, which requires postage. These forms should ask for the name of your employee's bank, routing number, account number, and the name of the account.
If you offer a benefits program, your new hire paperwork packet should include information on what benefits are available and what options the employee has for choosing a benefits package, if any. Benefits paperwork should also ask for information on any family members who may be enrolled or eligible for benefits under the company plan.
You may also want to have new employees sign non-disclosure agreements depending on the nature of their work. These agreements protect your company from former employees going to work for competitors or sharing industry secrets. Be sure to have a lawyer draft, or at least review, this agreement to be sure it abides by all federal and state employment laws.