The Business sCOOP – How do I get started with HR help?
Allyson Brainson: Hi, I’m Allyson Brainson with The Cooperative Bank of Cape Cod, and I’m here with Julia from Complete Payroll Solutions. And this is the Business sCOOP. Julia, what do business owners need to do to get started with Complete Payroll Solutions?
Julia Furtado-Lavoie: Thanks for asking that question, Allyson. This is something we talk about every day. It really depends on where you are in the setup process with your business. The first thing is you do need a federal id number? Whether you are a sole proprietor, or an LLC, a corporation, you do need a federal id number. Many sole proprietors think that they can use their Social Security numbers, but when you’re opening up a payroll account or you’re using payroll services, you really shouldn’t use your social. So, a federal id number is first needed. That’s the first step. The second step is your state registrations with state unemployment and state withholding, which are required in Massachusetts. And if you have employees, you need to make sure that workers comp is afforded to your employees and that’s something that we can help business owners with as well.
Brianson: Julia, can you tell us the difference between an exempt employee and a non-exempt employee?
Furtado-Lavoie: Sure. This is something that deserves a lot of attention, Allyson. So, thank you for asking. What I see as many times, a new store owner, for example, open up a store and say, “well I just can’t keep track of hours, so I’m going to pay everybody a salary” of whatever it may be. And actually you cannot do that. Hourly employees are entitled to overtime with anything over 40 hours. So, it’s important to know that if they don’t have supervisory responsibility and they’re truly not an employee that should be salaried, they need to be hourly. Many times I see retail people that are paid salary, and that can result in Department of Labor fines. So, it’s very important that when you’re meeting with your payroll professional ask them what do. You think we can’t really give you advice, your accountant probably will do that, but it’s most important that we can guide you and say, “well in this industry, we see that retail counter clerks are hourly employees.”
Brainson: What should a business owner do when they hire their first employee?
Furtado-Lavoie: So, this is very important, Allyson. The first thing is they really do want their employees to complete a W-4 form and I-9 and hopefully a direct deposit form. So, the W-4 form will allow the employee to indicate how they want their withholding to be done — single married, etc. That’s really important, and then the next most important form — if not the most important form — is the I-9. And one thing to keep in mind, if you hire an employee whose Social Security number begins with the nine, that’s actually an ITIN and technically they’re not legal to work in the United States. However, the IRS does turn a blind eye to this and allows anyone who wants to file and pay taxes or a tax return to actually complete a tax return. So, this has been overlooked, but the bottom line is if you are paying someone as an ITIN, you need to know they’re not legal to work in the U.S. And we will have the employer sign a form declaring that as well.
Brainson: And how would business owners handle paying workers with visas?
Furtado-Lavoie: That’s a really good question, Allyson. So, what happens is when you’re hiring a visa worker to come in, we need to look at what type of visa it is. Is it a J-1? Is it an H2B? And yes they will be assigned Social Security numbers to accommodate them as they work in this country during that time. We also will need to know what kind of visa it is because these visas hold different tax liabilities, and that’s something that we actually are aware of when we set the employee up. If it’s a J-1, we know what taxes they’re supposed to pay and not supposed to pay. Same with H2B, and that’s something a payroll company can take the thought out of it for you.
Brainson: Thank you for joining us today, Julia, and thank you for watching the Business sCOOP brought to you by The Cooperative Bank of Cape Cod.