Alabama New Employer Information
Federal and State Tax Accounts
Federal Tax Accounts:
- Obtain an Employer Identification Number, (also known as an EIN or FEIN), for your business if you do not already have one.
- The easiest way is to apply for an EIN with the IRS online. There is no cost to apply for an EIN.
- To learn more about applying for an EIN, read our help article, “Your Step-by-step Guide on How to Apply for EIN”
- Although it is not required, we recommend you enroll in the Electronic Federal Tax Payment System (EFTPS). You can easily register online. You will need to have this account to make tax payments online, or view payments made on your behalf by Patriot.
- To find out more about EFTPS, please read our article, “What Is EFTPS?”
State of Alabama Tax Accounts:
- Alabama new employers need to register with the Department of Revenue for a withholding tax account number for state income taxes (SIT).
- You will need to file for the Combined Registration/Application available online. You will be directed to the My Alabama Taxes website. Click “Register a business/Obtain a new tax account number” if you have not already set one up. It will take 3-5 business days to obtain your account number.
- New employers in Alabama need to register with the Alabama Department of Labor for a state unemployment insurance (SUI) tax account number.
- You can register online.
- Alabama’s new employer SUTA rate is 2.7% for 2023.
- Employers in Alabama will receive a new SUTA rate every year from the Alabama Department of Labor.
- To learn more about SUTA please read our article, “What Is SUTA Tax?”
- Alabama has many local income taxes. You will need to register with your local government if you do business in any of these localities: Attalla, Auburn, Bear Creek, Beaverton, Bessemer, Birmingham, Brilliant, Fairfield, Gadsden, Glencoe, Goodwater, Guin, Haleyville, Hamilton, Leeds, Lynn, Macon County, Midfield, Mosses, Opelika, Rainbow City, Red Bay, Shorter, Southside, Sulligent, Tarrant, and Tuskegee.
Setting Up Your New Employee:
- Fill out the required Form I-9. This is a two-part form. The first section is to be filled out by the employee and the second section will be filled out by the employer. For more information, please read “Form I-9 In a Nutshell”
- You must retain each employee’s completed Form I-9 as long as the individual works for you. For more information, please read “What Should Be in an Employee File?”
- Have your new employee fill out Form W-4, Employee’s Withholding Certificate, for federal income taxes.
- For more information, read our help article, “Updates to the Income Tax Withholding Tables and What You Need to Know”
- Have your new employee fill out the Alabama Withholding Certificate A-4 for Alabama state income taxes (SIT).
- Report all new hires online with the Alabama Department of Labor within 7 days of the date of hire or rehire.
- For more information, please visit the Alabama Department of Labor.
- Be sure you have met the minimum wage requirements for the federal government. Alabama follows the federal minimum wage rate of $7.25 per hour.
- By law, employers need to display the minimum wage poster for employees where they can read it.
Once you have all the necessary information, you will be able to set up your payroll for your business.
You will be required to keep employee payroll records for at least three years. For more information, please read our help article, “What Employers Should Know About Employee Payroll Records”
Let us know if you have any questions. We are here to help!
This is not an all-inclusive list for new employers. Please check with your state and federal government for full compliance.
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