New Hire Paperwork Checklist to Start on the Right Foot
So, you just hired your latest team member and are eager to get them trained and integrated into the business. In all the excitement of having them dive into their new responsibilities, it’s essential to remember new hire paperwork and do it right from the start.
This is where accounting and human resources (HR) intersect to ensure compliance and set expectations for each employee. There are the legally required forms, and then there is other paperwork that may vary based on your location, business, and the new hire's role. Having a checklist and process is best to make new hire onboarding efficient and ensure nothing is missed.
We’ll be reviewing a list of standard documentation that every small business owner should complete with every employee, starting with the obligatory forms, including:
Form W-4
Form I-9
State tax withholding form (if applicable)
State new hire reporting
Offer letter
Employment agreement
Direct deposit authorization
Benefits paperwork
Retirement account paperwork
Get a better understanding and guidelines of each of these below. While HR typically leads this process, it should be a collaborative effort with accounting to ensure all required documentation is done correctly.
Are you hiring self-employed pros rather than W-2 employees? Check out our guide to independent contractor paperwork!
Form W-4, Employee’s Withholding Certificate
One of the first items on your new hire paperwork checklist is Form W-4, which you must issue to every employee when they start. This is where the employee will select how much they want withheld from each paycheck for income taxes. You’ll keep this on file for your payroll team, but you don’t need to send it to the IRS. The employee’s W-4 will respond to the W-2 you issue them as they prepare to file their individual taxes.
Workers will find instructions on Form W-4 and can also use the online tax withholding estimator provided by the IRS to help determine their withholding amounts. They may decide to update their W-4 if their financial situation changes. Employers must keep every employee’s W-4 for four years.
Form I-9, Employment Eligibility Verification
Form I-9 is used to confirm the identity and employment authorization of individuals hired for employment in the United States. You must properly complete Form I-9 for every employee you hire in the U.S., including citizens and noncitizens. There are specific sections for both employer and employee to fill out.
You and the employee must complete this vital document by their first day of work. As the employer, you must examine the employee’s identification documents within three days of their start date. Failing to complete Form I-9 correctly or on time could mean significant penalties—so don’t overlook the details.
Thanks to the I-9 alternative procedure made available in August 2023, the process is easier than ever! As long as you are in good standing in E-Verify, you can perform a remote I-9 inspection. The new version of Form I-9 includes a checkbox to indicate that you reviewed the document using the remote method.
You’ll need to keep all I-9s for three years after each employee’s hire date or one year after termination, whichever is later. Be sure to store them securely, separate from other employee documents. That way, if you ever get a request from the government, you can provide them with the forms for inspection.
State Tax Withholding Form
Does your state have an income tax? If so, your new hire paperwork may include a state tax withholding form in addition to the W-4. Look up your state’s revenue or taxation office to find out if it requires employees to complete a state tax withholding form.
State New Hire Reporting
Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), employers must report all new hires to their state within 20 days of hire. However, some states require it sooner, so check with your state’s requirements. You’ll need to collect and report:
Employee’s name
Employee’s address
Social Security number (SSN)
Start date
Employer’s name
Employer’s address
Your Employer Identification number (EIN)
State new hire reporting is mandated so child support agencies can obtain delinquent child support from parents who owe with an income withholding order.
And yes, there are fines for failing to report new hires. States may impose noncompliance penalties, which can’t exceed $25 per new employee. In the case of a planned attempt not to report, the penalty can’t surpass $500 per new employee. Your state could also levy non-monetary civil penalties, depending on its laws. Simply put, completing this on the employee’s first day is best!
Offer Letter
Once you’ve decided to bring a new team member on board, the first official piece of new hire paperwork you should provide them is the offer letter. This high-level outline formally offers them the position and includes:
Basic Job Details: Title, department, start date, reporting structure
Compensation: Salary, bonuses, benefits, and any other compensation details
Employment Status: Full-time, part-time, or temporary status
At-Will Employment (unless specified otherwise)
Contingencies: Conditions that must be met before employment begins (e.g., background checks, drug tests, etc.)
The offer letter is the first step to ensuring you and the new hire are on the same page. They should sign the letter to acknowledge that they accept the terms.
Employment Agreement
While not legally required, the employment agreement or contract goes a long way in setting expectations, establishing a solid relationship, and protecting both your business and the employee. It is legally binding and more comprehensive than the offer letter, specifying the terms and conditions of employment, including:
A detailed description of the employee’s responsibilities
Specific start and end dates if it’s a fixed-term contract
Compensation and benefits
Payroll schedule
Work schedule and flexible work options, if applicable
Paid time off (PTO) policy
Termination conditions
Non-compete, non-disclosure, and non-solicitation agreements, if applicable
Intellectual property rights to any work the employee creates during employment
Direct Deposit Authorization
As you collect new hire paperwork, don’t forget the direct deposit form! While you can require employees to use direct deposit, they must first permit you to deposit their paychecks into their bank accounts.
If you make direct deposit mandatory, you must also do one of the following:
Allow employees to choose the bank
Select the bank employees must use to access their direct deposits but provide another payment option (e.g., physical check or cash)
Employee Benefits Paperwork
Whether you decided to provide employee benefits from your first hire or are newly offering benefits to your growing team, you’ll need to give this information along with enrollment instructions to new hires. Most insurance companies and other benefits providers use online portals where your team members can create accounts, opt in or out, and manage their benefits preferences.
Depending on your location and company size, you may also be required to offer certain benefits. Typically, these will include:
Health insurance
Dental and vision insurance
Life insurance
Disability insurance
Paid leave policies
Stock options
Retirement Plan Enrollment
While retirement plans can fall under the benefits category, they call for their own explanation. First, you’ll need to introduce employees to your retirement plans and ensure they understand the options available. Provide them with:
An overview of their options, such as 401(k) or 403(b), and whether they are traditional or Roth accounts
Annual retirement contribution limits and catch-up contributions
Information on matching contributions, conditions for eligibility, and the vesting schedule
Enrollment instructions and assistance as they set up their accounts
Summary Plan Descriptions (SPDs) and other legally required documents outlining plan details, rights, and responsibilities
Compliance notices like Summary Annual Reports (SARs) and notifications about plan changes or updates
Set Up Employees for Success with Your New Hire Paperwork Checklist
It may not be the most exciting part of bringing on new team members, but new hire paperwork is a must. When you have a checklist and process, it will be quick and painless and allow your accounting and payroll departments to set up the employee’s records, process payroll, and manage benefits for the new hire in no time.
Implement digital onboarding solutions and software and electronic signatures to ensure accurate and timely completion and avoid potentially costly missteps. This eliminates clunky paperwork prone to errors, keeps documents clean and organized, and mitigates having to wait for physical signatures and documentation to arrive.
Do you need guidance with your new hire paperwork related to accounting, taxes, and payroll? Let’s chat! Book an intro call with JLS Accounting today to learn how we can help you start each team member off right from Day 1.