New businesses are automatically enrolled in EFTPS (Electronic Federal Tax Payment System) when the Employer Identification Number is assigned. A welcome letter is sent from the Department of Treasury which includes a four digit PIN and instructions for activating enrollment. Federal taxes are submitted electronically via the www.eftps.com website.
A new business can be registered with the Virginia Department of Taxation and/or Virginia Employment Commission via VATAX Online at www.business.tax.virginia.gov. Registration can also be completed by paper filing Form R-1, Combined Registration Application Form.
Federal forms can be found on the Internal Revenue Service website www.irs.gov and state forms can be obtained from the Virginia Department of Taxation website www.business.tax.virginia.gov.
Under Garris and Company’s resources tab the following employment forms can be found and downloaded:
- Form W-4 Employee’s Withholding Allowance Certificate
- Form VA-4 Employee’s Virginia Income Tax Withholding Exemption Certificate
- Form I-9 Employment Eligibility Verification
All employees are required to report new and rehired employees within twenty days of their start date to the New Hire Reporting Center. The simplest method to submit the pertinent information is online at the Virginia New Hire Reporting Center website www.VA-newhire.com.
Publication 15, (Circular E) Employer’s Tax Guide provides instructions and tables for withholding federal taxes from your employees’ wages.
The Virginia website, www.business.tax.virginia.gov, has an Employer Withholding Tax Calculator to determine the amount of state withholding. Detailed instructions can also be found in the Withholding Tax Guide at www.tax.virginia.gov.
Answers to questions concerning reporting and payment of employment taxes for household employees can be found in Publication 926 Household Employers Tax Guide available on the IRS website www.irs.gov or by contacting Garris and Company. Based on the wages paid to the household employee you may need to withhold and pay social security and Medicare taxes, federal unemployment taxes and state unemployment taxes. While not required to be withheld, federal and state income tax may be withheld from wages if the employee requests you to do so.
An employer must examine all evidence of control and independence with the relationship they have with the worker. There are three basic categories that must be examined – behavioral control, financial control, and the type of relationship.
Behavioral control – How is the work environment directed by the employer? Does the employer directly control how the work is to be performed? Does the worker provide the same services for other businesses?
Financial Control – How is the worker reimbursed for his services and expenses? Is the worker available to perform similar services for other businesses?
Type of relationship – What extent does the worker provide similar services for other businesses? Are there written contracts describing the relationship? Is the worker provided with employee type of benefits? What is the permanency of the relationship?
If an employer has direct control of the workers performance of services and pays them employee type benefits they would be classified as an employee.
If the worker controls the work environment, provides the same type of services for other businesses and is not paid any employee type benefits then they would be classified as an independent contractor.