This is part 2 of a seven-part series for small business owners looking to avoid making payroll mistakes.

• Overview: You Can Avoid These 7 Payroll Tax Mistakes
• Mistake #1: Classifying Workers Improperly
• Mistake #2: Failure to Verify and Report New Employees
• Mistake #3: Not Following Labor Laws
• Mistake #4: Not Applying for Payroll Tax Accounts
• Mistake #5: Paying the Wrong Tax Rates
• Mistake #6: Missing Payroll Tax Deadlines
• Mistake #7: Using an Inefficient Payroll Process

You must verify the identity and legal work status of employees, have proper tax filing info, and follow new hire reporting laws.

Why is this important?

Possible consequences include: Incomplete or erroneous payroll records, fines, and increased scrutiny of your business.

How to avoid this mistake:
Get organized before your new employee starts, and follow laws in a timely manner.

1.  Verify Name and Social Security Number

Record the employee’s name and Social Security number for W-2 reporting. See the employee’s card, or use the Social Security Administration’s Verification Service to verify the number.

2.  Give New Employees Form W-4

Employees should complete Form W-4, asking for SSN, contact info, and filing status, before the first day of work.

• Keep the W-4 on file. It remains in effect until an employee completes a new one (tax-exempt employees must complete a new W-4 annually).

3.  Complete Form I-9 and E-Verify

Within three days of hire, verify an employee’s eligibility to work in the U.S. For more info, read “What is Form I-9?”

• Have the employee complete Part 1 of Form I-9, Employment Eligibility Verification.
• Ask to see documents proving identity and work eligibility.
• Complete Section 2, stating the documents appear to be authentic.
• Use E-Verify to verify the employee (optional in most states). For more details, read “What is E-Verify?”

4.  Follow New Hire Reporting Laws

New hire reporting laws ensure enforcement of child support orders. Look up your state’s New Hire Reporting Center here.