Will you employ others in your new business venture?  Both state and federal law requires you to comply with various rules that affect your employees’ paychecks, their health and their work status. Some regulations require you to pay while others require your employees to foot the bill. Here is a basic breakdown of what you will need to establish and carry out when you bring employees on board.

Paycheck Deductions

Here are some of the necessary deductions you will need to make to your employees’ paychecks to legally operate a business in the state of North Carolina.

  • Establish state tax withholding and forward the funds to the state Department of Revenue
  • Establish child support withholding on an as-needed basis
  • Withhold federal income tax following your employees’ W-4 elections

Insurance

There are two types of insurance your business will entirely pay for the benefit of your employees. The first is the unemployment insurance tax which employers pay to the Division of Employment Security.

Workers’ compensation is insurance coverage that provides wages and covers medical expenses for employees that get injured at work. You must apply for workers compensation coverage if you have three or more employees. Criminal penalties apply if your business does not provide this coverage.

If you have over 50 employees, you will need to offer health insurance to them to comply with the Affordable Care Act. Many employers partially subsidize the cost of coverage as a further benefit to their employees.

Verifications

The Immigration Reform and Control Act of 1986 requires that all employers verify employees’ proof of identity and citizenship status by completing the I-9 form. Employers can use the federal government’s E-Verify system to confirm eligibility to work in the United States electronically.

The North Carolina State Directory of New Hires keeps track of employed persons to ensure that applicable workers are eligible to pay their child support. The state requires that employers report their new hires as well as newly terminated employees to keep their directory accurate.

The North Carolina Department of Labor (NCDOL) requires all businesses in the state to display posters explaining employment laws regarding:

  • Wages
  • Health and safety
  • Discrimination

With so many legal requirements that employers have to follow, It makes sense for a new entrepreneur to consult with a professional that fully understands what best business practices need establishment.