It is essential for startups and new companies to know the importance of a new business checklist and why I-9s have to be part of the planning. Opening a new business is cause for celebration, but it can also bring with it an avalanche of responsibilities. While some new businesses tend to focus on the brand, design, and logistics of opening day, these will be moot points if it is closed down due to noncompliance with federal I-9 laws.
What Is the Form I-9?
The Form I-9 is a federal form that new employees are asked to complete to facilitate verifying their identity as well as their employment authorization in the United States. Although the form primarily collects information from the employee, employers also have a time-sensitive role to play in its completion.
The form is broken down into three main sections. The first section collects personal information from the employee along with their attestation of employment authorization. The second part tasks employees with presenting acceptable documents as evidence for their employment authorization which the employer must then review for authenticity. The third section deals primarily with rehires or changes to identity or authorization.
Each section of the form has strict guidelines and deadlines which must be met in order to be compliant with federal law. Failure to meet them could result in violations and potentially punitive fines or other more serious consequences.
New Business Checklist and Why I-9s Have to Be Part of the Planning
In terms of necessary legalities, having a new business checklist and learning why I-9s have to be part of the planning should be a top priority. Afterall, although a business provides a product or service to others, it must be compliant with federal law to legally operate.
According to the Internal Revenue Service, several legalities to be included on a new business’ checklist should include:
- Applying for an Employer Identification Number (EIN) when applicable. This information, also referred to as a Federal Tax Identification number, is used to identify a business. This is a free service and can be done online.
- Selecting a business structure. Deciding what type of business entity a company is (sole proprietorship, corporation, partnership, S corporation, or limited liability company) will determine what types of income tax returns need to be filed and will also have other legal implications.
- Choosing a tax year. This information will establish an annual accounting period for which a company must keep records to effectively report income and expenses. Tax years can be based on a calendar year (January 1st to December 31st) or a fiscal year (a period of 12 consecutive months that ends on the last day of any month but December).
- Having employees complete the Form I-9 and a W-4. The Form I-9 will confirm an employee’s identity and reviews their authorization to work in the United States. The W-4 form is an employee’s withholding certificate for taxes.
- Paying your business taxes. Businesses must pay a variety of taxes including income taxes, estimated taxes, employment taxes, self-employment taxes, and possibly excise taxes depending on what industry their company is in.
With just five items on the above list it can seem deceivingly simple, which may catch some new businesses off guard regarding the time it takes to complete it. The primary reasons why it is necessary for I-9s to be part of the planning process for a new company is so the company can be compliant with federal law while also allowing sufficient time for the following:
- Learning the I-9 system. Although this form is somewhat straightforward in the information it requests from employees, the job of employers is more involved. From ensuring that the forms have no incomplete or missing fields to reviewing in good faith the authentication of presented identification documents to completing each step by the required deadlines, the process can be intense.
- Training management on I-9 protocol. While a business owner is often responsible for getting the form completed for key business management positions in the beginning, that responsibility frequently transfers to one or more members of management tasked with hiring the remainder of employees needed for opening day, as well as on an ongoing basis. Without this training, management could risk making a mistake that might compromise the company’s compliance.
- Onboarding multiple employees at one time for the grand opening. Despite deadlines for each of the three sections of the Form I-9, the process is still time intensive, especially if it is combined with opening a case in the federal E-Verify program. When multiplying the amount of time it takes to complete one Form I-9 by 10 or more employees all at once, the process can be overwhelming.
- Balancing it with other new business responsibilities. New businesses are tasked with a record number of responsibilities so that they comply with local, state, and federal law while still successfully running their establishment. While each of these obligations has their own timeline, they must be completed for the business to remain in good standing with the federal government and open its doors to the public on time.
Why It Can Be Best for New Businesses Not to Go It Alone with the Form I-9
A new business checklist and why I-9s have to be part of the planning is just part of the reason that it may not be best for a company to go it alone. Opening a new business can be overwhelming and enlisting professional help for some of the more complicated and laborious tasks can be a good idea.
Particularly when preparing to open, a new business may want to work with a company that offers assistance with the onboarding process via digital I-9 software. This type of program is designed to streamline the hiring process, minimize human error, and avoid compliance problems that often arise out of simple mistakes. This can provide an extra layer of protection against compliance issues that also allow for a business owner’s peace of mind in what is already likely a stressful time.
To set the stage for success, a new business checklist and understanding why I-9s have to be part of the planning can go a long way. Knowing is part of the equation but implementing a checklist and Form I-9 protocol can be entirely different. Simplify these tasks by working with a reputable company who understands the I-9 process and how to streamline it for your company.
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