Hiring a W-2 employee

[archer454]

My husband and I own & operate a small business that’s bringing in about $100,000 revenue per month. We started in April 2023 and we’re needing to hire an employee which will be W-2. I’m at a loss on where to start. What i’ve read online so far seems pretty daunting with lots of forms to file for the irs and our state attorneys general office(TX). I’m considering a payroll service but honestly I do have the time to do it myself if it’s not too difficult. I have reached out to our CPA but they haven’t gotten back with me yet. Does anyone else do this themselves? What was the process like for hiring your first employee?

 

[lekolonka]

@archer454 I’d recommend Gusto for payroll, which is what my accountant recommended. Could I do it myself?Probably, but is it worth my time? No, it’s not.

Gusto takes care of state local and federal filings. It walks you through getting the right tax ids and getting setup. Then it’s autopilot from there. You can also add an employee and it’ll email them a link to fill in their information securely, SSN, bank account info etc for direct deposit. It’s only 40/months then an additional $6/mo/employee. So for $46/month for one employee and it’s taken care of.

Just knowing I don’t have to worry about the filing deadlines is a huge relief.

 

[jesusisworthy]

@lekolonka LOVE Gusto! Was using quickbooks and it was a nightmare, their support was terrible. Gusto will call back during their help hours in less than 3 minutes after your request a help call.

 

[lekolonka]

@jesusisworthy Yea was on quickbooks and though I needed to fix a W2, they called me back 3-4 months later…

 

[praiseyehoshua]

@lekolonka I second this! Worth every penny. They were great during Covid with PPP, too, so I trust them.

 

[lekolonka]

@praiseyehoshua Their support and service is also good, I had a minor issue when I first setup my account, and they got it squared away very quickly and easily

 

[miamour]

@archer454 Hire a service. They guarantee accuracy of filings. It’s not worth the hassle to make some small error and then spend hours and days fixing it yourself.

 

[613jono]

@archer454 I must be in the wrong business haha. What business did you get up to $100k in revenue a month with no employees?

 

[archer454]

@613jono I know how it sounds but we had an “easier” start since he had a partnership for about 5/6 yrs previously in the same industry. They split up like most partnerships do so we started our own. We are in the construction supply business and had a lot of contacts when we started.

 

[yvonneceleste]

@archer454 I'm in Texas. There is only 1 form you have to send in with a new hire. This is how we do it. There are 3 forms you will need to get filled out. (1) Federal W-4 to calculate withholdings. This is kept in house. It is kinda intimidating but all you need when it's done is how they want to file ie single, married and number of dependents. (2) Federal I-9, This is to verify employability ie not illegal. This is kept in house with copies of their supporting docs. SS card, DL etc. (3) Texas new hire form. This is the only one you have to send in. This is so the State AG can have you deduct child support if they owe it. We mail this in to the address on the form but I think It can be entered online.

 

[archer454]

@yvonneceleste Thank you for explaining it simply . Do you do the payroll yourself or use a payroll service? It seems like I’ll need to file an Employers Quarterly Federal Tax Return form 941 for payroll also.
The withholding tax aspect is also intimidating.

 

[yvonneceleste]

@archer454 I do it all myself for 15 employees. I have looked at hiring a payroll company but since I'm already doing it now and it only takes about an hour every 2 weeks I haven't made the jump. I use a payroll program that is built into our business software to actually do the biweekly payroll and print checks. You can do this manually since you will be looking at only 3 checks. You will need to get a copy of the latest irs booklet on calculating withholding. It is pretty self explanatory. We have an account with the ETFS system to remit the taxes to the IRS. And yes you will have to file a form 941 (Withholding, Medicare & SS) every quarter and a form 940 (federal unemployment) at the end of the year. You will also need to open an account with the State TWEC office to remit State unemployment quarterly. You really need to talk to an accountant about setting it all up for you or you can hire a payroll company to do it. If I was starting new with no knowledge like you are I would go the payroll company route. I started this 40 years ago when it was much simpler and have learned the new stuff as it was added as time rolled along.

 

[yahchristian]

@yvonneceleste For how cheap and convenient Gusto is, I can't remotely imagine going back to doing this manually.

 

[archer454]

This might be what works for us best considering how much time it would save trying to figure it out myself.