Help me hire an employee, in the eyes of the government

April 9, 2007 9:13 PM

I am a sole proprieter in CA and hiring my wife as an employee. I am having a lot of trouble figuring out the process. I know that the CA EDD is the state agency, and the IRS is the federal agency that we use to make this happen- but neither place states very clearly what to do to tell them that I am hiring her.

I found this page for the EDD, which has a pretty good run down. I sent in the registration form- but no response with an employer number so I can send in the report of hire. Obviously I need to call and ask. Anything I missed?

For the IRS, I found this page, but I've had an EIN for awhile. I can't find anything on the IRS site about how to tell them I am hiring an employee. Help?

PS: I don't want any advice on if I should change to an LLC or anything- please just help for the question if you can.

posted by Chuck Cheeze to work & money (4 comments total)

Once you start sending in her withholding taxes, they will know that she is working, I don't think you have to notify them, the IRS.
posted by lee at 9:26 PM on April 9, 2007

The IRS instructions for employers are found in Publication 15 Circular E. Also download IRS Form 941 and its instructions. Each quarter you file Form 941 which indicates the employee taxes due. You must pay income tax withholding, social security and medicare taxes either with your quarterly Form 941 or monthly, depending on the size of the payment required. Note that you do not need to pay FUTA, federal unemployment tax for a spouse employee.

You can find forms and publications here.

As Lee said, you don't have to specifically notify the IRS that you hire or fire an employee. You just pay the taxes due when you send in your Form 941 each quarter. That is all they care about. Large employers are required to pay the taxes electronically, but small employers can pay by check or credit card.

You should be able to find similar forms for California on the state web site.
posted by JackFlash at 10:36 PM on April 9, 2007

For federal taxes you can also register in advance at the government's EFTPS website. You'll be all set to pay taxes online, although you still have the option of paying at your bank.
posted by robinpME at 7:07 AM on April 10, 2007

Ancedotal: I've started using Bank Of America's payroll service to handle all of the above problems that you're having.

They're completely turnkey, and they're more or less free if you have an account with BOA -- and they do it all electronically for you. No headaches. Easy peasy.
posted by donguanella at 4:30 PM on April 10, 2007