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California Legal Requirements: Things to Do when Hiring

 

Becoming an employer in California is a big step for many solopreneurs, sales and service providers.

Once you go from working with contractors to becoming an employer by hiring an employee, here is list of things that I recommend on the must-do list. It’s not comprehensive but should give employers-to-be a nice start.

1)    File for an Employee Identification Number (EIN).

2)    Purchase Workers' Compensation Insurance for all employees.

3)    Register with the Employment Development Department (EDD) and submit necessary forms as they become due.

From their website:

What forms do I need, and where do I get them?

  • DE 1, Registration Form: After paying over $100 in wages in a calendar quarter, fill out a DE 1 to receive an EDD employer account number. Certain types of businesses - agricultural, government, nonprofit, schools and those that only have to withhold PIT - have special registration forms.
  • DE 34, Report of New Employee(s): To notify EDD of each new employee’s name, address, social security number and start-to-work date.
  • DE 88, Payroll Tax Deposit coupon: Send with your check to pay state payroll taxes. Payments by Electronic Funds Transfer and credit card are also available.
  • DE 9, Quarterly Contribution Return and Report of Wages: To report the total subject wages and UI/ETT/SDI/PIT taxes due for each quarter and reconcile the taxes due with the tax deposits paid during the quarter.
  • DE 9C, Quarterly Contribution Return and Report of Wages (Continuation): To report all employees, their subject wages, PIT wages and PIT withheld.

When are the forms and taxes due?

  • DE 1: Due within 15 days of paying over $100 in wages in a calendar quarter.
  • DE 34: Due within 20 days of the employee’s start-to-work date.
  • DE 88: Due at least quarterly; may be due more often.

DE 9 and DE 9C: Due on the first day of the month after the end of each calendar quarter (April 1, July 1, October 1 and January 1)

4)    Post required notices in the workplace (you can get one large poster at the California Chamber of Commerce)

5)    Hand out pamphlets required by law. Also available at the California Chamber of Commerce.

6)    Set up a payroll system/figure out how to otherwise pay employees so that you deduct the proper amount of taxes from each paycheck, etc. You might also consider a full service payroll system that will help figure out all of that for the company and indemnify it for wrong taxes. This will also ensure that employees receive what you are legally required to provide them, such as an accurate W-2 at the end of the year.