When setting up payroll for your business, there are a few federal and state requirements that you will need to take care of. Payroll compliance isn’t a one-time task you can easily check off and remaining compliant is a big job. You must make sure your business is compliant with all payroll laws year-round. To keep track of what you need to do, use a payroll compliance checklist.

1. Fill out employee onboarding forms

When you hire a new employee, you’ll need to gather some info. First, they’ll need to fill out a W-4 form to tell you how much income tax they want withheld from their paychecks. Employers must withhold a mandated percentage of employee wages and pay it to the federal government. Next, they’ll need to fill out the I-9 form to prove they are allowed to work in the U.S. With the I-9 form you’ll also need to check their passport or other list of acceptable documents, as outlined in the instructions on the form. Once these are complete, make sure to store them in your records.

2. Report your new hires to the state

When you hire a new employee, you must report to the state where they will be working. The state then uses this information to find people who owe government-mandated debts, such as child support. Then the employer is required to garnish (withhold a portion) of their wages. This report should be filed by the due date required in your state (usually within 20 days of hire). You can choose to have your payroll company file this report for you.

3. Get Workers’ Compensation Insurance

Almost every state requires employers to have Workers’ Compensation insurance. However, requirements to obtain Workers’ Compensation vary state by state. Depending on your state rules, you can get this insurance through a commercial carrier or through your state’s workers’ compensation insurance program. Workers’ comp insurance provides benefits to employees who are involved in a work-related injury, and it covers your business in case of employee illness or injuries that occur while your employees are on the job.

4. Get workplace posters

There are certain posters that you must post in your offices depending on the city, county and state where your business is located. The posters are designed to help employers comply with the poster requirements of several laws administered by the Department of Labor (DOL). These laws require employers to display official DOL posters where employees can readily observe them. DOL provides the posters at no cost to employers. Check out this Department of Labor’s Poster Advisor tool to find the required posters for your location and get printable versions of them. Some online companies, like the Labor Law Poster Store, also offer these posters for purchase.

5. Follow employment and labor law requirements

It is a good idea to familiarize yourself with labor laws that may apply to you, such as minimum wage, wage garnishments, termination issues, and contractors classification. You can find a great resource for this info at the  Department of Labor’s Employer Guide.

6. Health Insurance

If you offer health insurance to your team, make sure that you meet ACA regulations. Most payroll companies will help keep you complaint with ACA regulations by managing your pre-tax payroll deductions, offering a 1095-C to applicable companies, providing your newly hired employees with the ACA Marketplace Notice, and keeping you aligned with your current policies and insurance carrier.

Susan Claybrook
Client Liaison