Home-Based Businesses

What do Apple Computer, Hershey's, Mary Kay Cosmetics, and the Ford Motor Company have in common? These well-known corporations all started out as home based businesses. In fact, more than half of all U.S. businesses are based out of an owner's home. Starting a home based business has many rewards as well as challenges. This guide provides resources that will help you learn more about working out of your house, starting a home-based business and managing your business within the law.

Before You Begin

Are you ready to start a business? In less than five minutes, the Small Business Start Up

Assessment Tool will help you understand your readiness for starting a small business. Your responses will be scored automatically and an assessment profile will be provided after you click the Submit button. This is an automated self-assessment tool. SBA is not collecting information, tabulating or utilizing individual visitors results. Can you live and work in the same area? Find the answer by asking yourself the

following questions: Where in the home will the business be located? What adjustments to living arrangements will be required? What will be the cost of changes? How will your family react? What will the neighbors think? Home Based Business....Is it For Me? Is working from home right for you? Learn about

several factors you should consider when starting a home based business. Starting a Business in Your Home: Weighing the Pros and Cons. Have you thought about

the characteristics and challenges that are most commonly involved in launching home based businesses? View the pros and cons before you begin a home based business.

Start a Home Based Business

If you have decided you are ready to start a home based business, then you might already have an idea and/or the products you want to market. If not, think about your background, what you are good at, and what experience you have. This exploration can get you on your way to coming up with a sound idea. For additional guidance on how to start your business, use the resources listed below.

Check out the first steps for starting any small business Obtain a checklist of things to do at How to Set Up a Home Based Business Get planning ideas by reading an article that provides a comprehensive approach to

developing a business plan for a home based business Learn how your local government's zoning ordinances may affect your business. Not

knowing the potential legal and community problems associated with having a business at home, and the rules, can have devastating consequences.

Buying a Work-at-Home Franchise

Home based franchises are becoming more common, but buyer beware! Some "work at home" franchise opportunities are schemes to get your money. Visit the Consumer Guide to Buying a Franchise for more information about evaluating and buying into franchises and related work-at-home business opportunities.

Financing a Home Based Business

Federal agencies do not provide grants for starting a home based business. However, there are a number of low-interest loan programs that help individuals obtain startup financing. Visit the Loans and Grants Search Tool to get a full list of grant, loan and venture capital programs for which you might qualify.

Marketing a Home Based Business

There are several ways to market your business and get in touch with your customers. Customers are a key component to businesses success. Learn how to successfully market your home based business: Home-Based Business - Market Your Product.

Filing Taxes for a Home Based Business

Doing your personal taxes can be a pain, but now you have to do the taxes for your home based business as well. Use the resources below to learn how to correctly file your small business taxes and get the proper deductions. Small Business Self-Employed One-Stop Resource

Provides access to the official IRS gateway for tax information for small business owners. Small Business Expenses and Tax Deductions

Explains how to deduct business expenses on your income taxes. Social Security Guide for the Self-Employed

Covers how to report your earnings since you are self-employed

Follow These 10 Steps to Starting a Business

Starting a business involves planning, making key financial decisions and completing a series of legal activities. These 10 easy steps can help you plan, prepare and manage your business. Click on the links to learn more.

Step 1: Write a Business Plan

Use these tools and resources to create a business plan. This written guide will help you map out how you will start and run your business successfully.

Step 2: Get Business Assistance and Training

Take advantage of free training and counseling services, from preparing a business plan and securing financing, to expanding or relocating a business.

Step 3: Choose a Business Location

Get advice on how to select a customer-friendly location and comply with zoning laws.

Step 4: Finance Your Business

Find government backed loans, venture capital and research grants to help you get started.

Step 5: Determine the Legal Structure of Your Business

Decide which form of ownership is best for you: sole proprietorship, partnership, Limited Liability Company (LLC), corporation, S corporation, nonprofit or cooperative.

Step 6: Register a Business Name ("Doing Business As")

Register your business name with your state government.

Step 7: Get a Tax Identification Number

Learn which tax identification number you'll need to obtain from the IRS and your state revenue agency.

Step 8: Register for State and Local Taxes

Register with your state to obtain a tax identification number, workers' compensation, unemployment and disability insurance.

Step 9: Obtain Business Licenses and Permits

Get a list of federal, state and local licenses and permits required for your business.

Step 10: Understand Employer Responsibilities

Learn the legal steps you need to take to hire employees.

Guide For Writing a Business Plan

What goes into a business plan? There is no single formula for developing a business plan, but some elements are consistent throughout all business plans. Your plan should include an executive summary, a description of the business, a plan for how you will market and manage your business, financial projections and the appropriate supporting documents. To help you get started in writing your business plan, try the business planner. In addition, we have summarized the essential elements in the following outline.

Elements of a Business Plan

1. 2. 3. Cover sheet Executive summary (statement of the business purpose) Table of contents

4.

Body of the document A. Business 1. 2. 3. 4. 5. 6. B. Description of business Marketing Competition Operating procedures Personnel Business insurance

Financial data 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Loan applications Capital equipment and supply list Balance sheet Breakeven analysis Profit and loss statements Three-year summary Detail by month, first year Detail by quarters, second and third year Assumptions upon which projections were based Pro-forma cash flow

C.

Supporting documents 1. Tax returns of principals (partners in the business) for last three years,

personal financial statements (all banks have these forms) 2. Copy of franchise contract and all supporting documents provided by the

franchisor (for franchise businesses) 3. 4. 5. 6. Copy of proposed lease or purchase agreement for building space Copy of licenses and other legal documents Copy of resumes of all principals Copies of letters of intent from suppliers, etc

Tips for Choosing Your Business Location

Choosing a business location is perhaps the most important decision a small business owner or startup will make, so it requires precise planning and research. It involves looking at demographics, assessing your supply chain, scoping the competition, staying on budget, understanding state laws and taxes, and much more. Here are some tips to help you choose the right business location. Determine Your Needs Most businesses choose a location that provides exposure to customers. Additionally, there are less obvious factors and needs to consider, for example:

Brand Image Is the location consistent with the image you want to maintain? Competition Are the businesses around you complementary or competing? Local Labor Market Does the area have potential employees? What will their

commute be like? Plan for Future Growth If you anticipate further growth, look for a building that has

extra space should you need it. Proximity to Suppliers They need to be able to find you easily as well. Safety Consider the crime rate. Will employees feel safe alone in the building or

walking to their vehicles? Zoning Regulations These determine whether you can conduct your type of business

in certain properties or locations. You can find out how property is zoned by contacting your local planning agency. Evaluate Your Finances Besides determining what you can afford, you will need to be aware of other financial considerations:

Hidden Costs Very few spaces are business ready. Include costs like renovation,

decorating, IT system upgrades, and so on. Taxes What are the income and sales tax rates for your state? What about property

taxes? Could you pay less in taxes by locating your business across a nearby state line?

Minimum Wage While the federal minimum wage is $7.25 per hour, many states have

a higher minimum. View the Department of Labors list of minimum wage rates by state. Government Economic Incentives Your business location can determine whether

you qualify for government economic business programs, such as state-specific small business loans and other financial incentives. Is the Area Business Friendly? Understanding laws and regulations imposed on businesses in a particular location is essential. As you look to grow your business, it can be advantageous to work with a small business specialist or counselor. Check what programs and support your state government and local community offer to small businesses. Many states offer online tools to help small business owners start up and succeed. Local community resources such as SBA Offices, Small Business Development Centers, Womens Business Centers, and other government-funded programs specifically support small businesses.

Business Structure and Tax Implications

Determine Your Federal Business Tax Obligations When starting a business, you must decide what form of business entity to establish. Your form of business (e.g., sole proprietorship, partnership, LLC) determines which income tax return form you have to file. The federal government levies four basic types of business taxes:

Income tax Self-employment tax Taxes for employers Excise taxes

To learn more about these taxes, visit the Internal Revenue Service's (IRS) Guide to Business Taxes. Federal Income Taxes Select the form of your business below to find out which federal tax forms you need to file: Sole Proprietorship Partnership

Corporation S Corporation Limited Liability Company (LLC)

State Income Taxes Nearly every state levies a business or corporate income tax. Like federal taxes, your state tax requirement depends on the legal structure of your business. For example, if your business is an LLC, the LLC is taxed separately from the owners of the business, while sole proprietors report their personal and business income taxes using the same form used to report their business taxes. Consult the General Tax Information link on the State and Local Tax Guide for specific requirements.

Register Your Fictitious or "Doing Business As" (DBA) Name

Naming your business is an important branding exercise, but if you choose to name your business as anything other than your own personal name then youll need to register it with the appropriate authorities. This process is known as registering your Doing Business As (DBA) name. What is a Doing Business As Name? A fictitious name (or assumed name, trade name or DBA name) is a business name that is different from your personal name, the names of your partners or the officially registered name of your LLC or corporation. Its important to note that when you form a business, the legal name of the business defaults to the name of the person or entity that owns the business, unless you choose to rename it and register it as a DBA name. For example, consider this scenario: John Smith sets up a painting business. Rather than operate under his own name, John instead chooses to name his business: John Smith Painting. This name is considered an assumed name and John will need to register it with the appropriate local government agency. The legal name of your business is required on all government forms and applications, including your application for employer tax IDs, licenses and permits.

Do I Need a Doing Business As Name? A DBA is needed in the following scenarios:

Sole Proprietors or Partnerships If you wish to start a business under anything other

than your real name, youll need to register a DBA so that you can do business as another name. Existing Corporations or LLCs If your business is already set up and you want to do

business under a name other than your existing corporation or LLC name, you will need to register a DBA. Note: Not all states require the registering of fictitious business names or DBAs. How to Register your Doing Business As Name Registering your DBA is done either with your county clerks office or with your state government, depending on where your business is located. There are a few states that do not require the registering of fictitious business names.

Getting a Tax Identification Number

You're familiar with paying personal taxes. As a small business owner, you'll need to pay business taxes as well. All businesses are required to pay federal, state, and in some cases, local taxes. Most businesses will need to register with the U.S. Internal Revenue Service (IRS) and state and local revenue agencies in order to receive a tax ID number or permit. The following resources will help determine your tax registration requirements.

Employer Identification Number (EIN) What is an EIN?

An EIN is also known as a federal tax identification number, and is used to identify a business entity. Employers with employees, business partnerships, and corporations and other types of organizations, must obtain an EIN from the IRS. The EIN is also known as an Employer Tax ID and Form SS-4. The resources below will help you get more information about getting an EIN for your new business.

Guide to the Employer Identification Number Apply for an EIN Online

Do you want to see another Business EIN?

There are several ways to try to locate another business EIN. If a company is public it may put its EIN on the first page of its 10-Ks, 20-Fs and other U.S. Security Exchange Commission (SEC) filings. You can locate these documents for free through the SEC's Electronic Data Gathering, Analysis, and Retrieval (EDGAR) database. Nonprofits often include the EIN on Form 990. GuideStar maintains a free, searchable database of these documents. Private companies sometimes list EINs on company websites. You can also search fee-based resources such as Westlaw (BUS-TRACK and/or FEIN-ALL) or Lexis (D&B/FEIN).

What if you misplace your EIN?

There are ways to retrieve your company's EIN if you lose the number. First, look for your confirmation notice issued by the IRS after you applied for your EIN. Ask the IRS to search for your EIN by contacting the Business & Specialty Tax Line. You will need to provide identifying information to verify that you are authorized to receive the EIN.

State Tax Registration

Just as you must have a federal tax identification number, you will also need to obtain Tax IDs and permits from your state's revenue agency. Businesses that operate within the state are required to register for one or more tax-specific identification numbers, licenses or permits, including income tax withholding, sales and use tax (seller's permit), and unemployment insurance tax.

If you plan to sell products and you are required to collect sales taxes, you will likely need to obtain a Sales Tax Permit or Vendor's License from your state or local government (or both).

The State and Local Tax page is a good place to learn more about your state and local tax registration requirements.

Learn About Your State and Local Tax Obligations

Determine Your State Business Tax Obligations

In addition to business taxes required by the federal government, you will have to pay some state and local taxes. Each state and locality has its own tax laws. The links below provide access to key resources that will help you learn about your state tax obligations. Having knowledge of your state tax requirement can help you avoid problems and your business save money. The most common types of tax requirements for small business are income taxes and employment taxes.

Income Taxes Nearly every state levies a business or corporate income tax. Your tax requirement depends on the legal structure of your business. For example, if your business is a Limited Liability Company (LLC), the LLC gets taxed separately from the owners, while sole proprietors report their personal and business income taxes using the same form. Consult the General Tax Information link under your state for specific requirements.

Employment Taxes In addition to federal employment taxes, business owners with employees are also responsible for paying certain taxes required by the state. All states require payment of state workers' compensation insurance and unemployment insurance taxes. The following states/territories also require a business to pay for temporary disability insurance:

California Hawaii New Jersey New York Rhode Island Puerto Rico

State and Territory Tax Resources

Use the links below to find out more about what you have to do to register and be open for business in your state.

Obtaining Business Licenses & Permits

Every business needs to be licensed to legally operate. Depending on your business, you may need to be licensed at the federal, state and/or local level. Beyond a basic operating license, you may need specific permits, such as an environmental permit. Regulations vary by industry, state and locality, so it's very important to understand the licensing rules where your business is located. Not complying with regulations for licensing and permitting can lead to expensive fines and put your business at serious risk.

How to Get Licenses and Permits

Visit the Permit Me tool to get a listing of federal, state and local permits, licenses and registrations you'll need to run a business.

Federal Licenses and Permits

If your business is involved in activities supervised and regulated by a federal agency, you may need to obtain a federal license. Here is a brief list of the licenses and permits that you may need for your business.

Agriculture
The U.S. Department of Agriculture (USDA) issues permits for businesses involved in the importation and interstate transportation of animals, animal products, biologics, biotechnology and plants.

Alcohol Beverages
Federal law requires manufacturers, wholesalers, importers and retailers of alcoholic beverages to register, pay special taxes and maintain certain records with the Alcohol and Tobacco Tax and Trade Bureau (TTB). Alcohol and tobacco businesses above the retail level (such as manufacturers, wholesalers, importers, exporters, etc.) must apply for an operations permit from the TTB. The federal government does not impose a fee or charge for permits. The applicant must obtain written approval from the TTB before engaging in business. Small producers, such as microbreweries and small wineries that may also have retail operations will need to contact the TTB for approval. All alcohol beverage businesses, including retailers of alcoholic beverages, such as bars, nightclubs, restaurants and retail liquor stores should contact their state's Alcohol Beverage Control Board for specific permit and licensing information, along with their city and/or county government for additional licenses and permits that may be required. In addition to obtaining appropriate permits, all businesses engaged in manufacturing, distributing and selling alcohol, including retailers, are required to pay special federal taxes. For more information on the requirements necessary to run an alcohol beverage business, visit the Food and Beverage Industry Guide

Aviation
FAA Licenses and Certificates Offers licensing information for airmen, aircraft, airports, airlines and medical aviation services. Pilot Licenses and Training Requirements

Provides a list of regulations, policies, license and certifications for pilots. Aircraft Mechanic Licenses

Provides a list of regulations, policies, license and certifications for aircraft mechanics.

Firearms, Ammunition and Explosives

Manufacturers, dealers and importers of firearms and ammunitions are subject to licensing standards described in the Gun Control Act, which is administered by the Bureau of Alcohol, Tobacco, Firearms and

Explosives (ATF), the principal law enforcement agency within the U.S. Department of Justice. The ATF is responsible for regulating the firearms and explosives industries. Firearms and Explosives License and Permit Information

Gives information on the National Licensing Center (NLC), which determines eligibility and acts upon applications for Federal firearms licenses, Federal explosives licenses and Federal explosives users permits. Safe Explosives Act

Provides guidance and information on licensing and permit requirements for explosive materials. Licenses required to carry a concealed weapon are issued by state or local governments. Manufacturers, distributors, importers, and dealers of firearms, ammunition or explosives need to file and pay excise taxes with the Alcohol and Tobacco Tax and Trade Bureau, a federal agency responsible for collecting excise taxes on firearms and ammunition to ensure that these products are labeled, advertised and marketed in accordance with the law. Firearms and Ammunition Excise Tax (FAET)

Explains FAET, a tax imposed by Chapter 32 of the U.S. Internal Revenue Service (IRS) Code (26 U.S.C. 4181) on the sale of firearms and ammunition by manufacturers, producers and importers. This packet contains all the information necessary for a firearms or ammunition dealer, importer or manufacturer to file and pay required excise taxes. It also includes information for those who wish to register before making tax-free firearms or ammunition sales to certain acceptable groups or organizations. 50 Gun Exemption to the Firearms and Ammunition Excise Tax (FAET)

Describes an amendment to the IRS tax code that provides an exemption from FAET for any pistol, revolver or firearm (article) if it was manufactured, produced, or imported by a person who manufacturers, produces, or imports less than an aggregate of 50 of such articles during a calendar year.

Fish and Wildlife

Businesses and organizations engaged in any wildlife related activity, including the import/export of wildlife and derivative products, must obtain an appropriate permit from the U.S. Fish and Wildlife Service. Fish and Wildlife Permits

Provides the main portal to resources, forms, tools and guides concerning federal fish and wildlife permits. Fish and Wildlife Import-Export Permit Issuing Offices

Gives information on Fish and Wildlife Service Law Enforcement, issued permits and addresses for Regional FWS Permit Offices.

Commercial Fisheries
The National Oceanic and Atmospheric Administration (NOAA) regulates the interaction between marine mammals and commercial fisheries by issuing permits for fishing activities that would otherwise be prohibited by law. NOAA Fisheries Forms Portal

Provides electronic versions of many NOAA Fisheries forms, listed for each geographic area by both the OMB (Office of Management and Budget) number and the NOAA form name. National Marine Fisheries Service Permit Shop

Issues permits for Atlantic tunas, updates permit information and reports recreational landings of bluefin tuna. Office of Protected Resources, Permits and Authorizations

Gives information on permits and authorizations that are required under the Endangered Species Act (ESA) and the Marine Mammal Protection Act (MMPA) to conduct activities that may result in the "taking" of a protected species. Authorizations and Permits for Protected Species (APPS)

Issues NOAA Fisheries permits and authorizations for federally-protected species under the Endangered Species Act (ESA) and Marine Mammal Protection Act (MMPA). Groundfish Federal Fisheries Permits

Provides permits and fishing authorizations issued by the Northwest Region for fisheries affecting west coast groundfish. High Seas Fishing Permits

Offers information on compliance with the High Seas Act along with permits.

Antarctic Marine Living Resource Trade Permits

Gives information on Catch Documentation Scheme (CDS) permits.

Maritime Transportation
Ocean Transportation Intermediary Licenses Provides a general description of the Office of Transportation Intermediaries along with appropriate contact information.

Mining and Drilling

The Minerals Management Service (MMS), a bureau in the U.S. Department of the Interior, is the federal agency that manages the nation's natural gas, oil and other mineral resources on the outer continental shelf. Businesses involved in the drilling for natural gas, oil or other mineral resources on federal lands may be required to obtain a drilling permit from the MMS. eWell Permitting and Reporting System

Offers an online application for permits to drill in the Gulf of Mexico.

Nuclear Energy
The U.S. Nuclear Regulatory Commission licenses commercial nuclear reactors and fuel cycle facilities, distribution of nuclear materials, and nuclear waste disposal facilities. Nuclear Regulatory Commission (NRC) Licensing

Provides NRC applicants and licensees with the rules and regulations governing the assessment and collection of fees and forms used in processing incoming payments from the licensee. Nuclear Regulatory Commission Consolidation Guidance about Materials Licenses

Offers a comprehensive source of reference information about materials regulation for those involved in various aspects of licensed materials use.

Radio and Television Broadcasting

If your business broadcasts information by radio, television, wire, satellite and cable, you may be required to obtain a license from The Federal Communications Commission (FCC). The FCC does not regulate the Internet or Internet Service Providers. Guide to Obtaining FCC Licenses

Provides information on how to obtain specific FCC licenses, from amateur radio and commercial radio to television broadcasting. How to Apply for a Broadcast Station

Outlines basic information about radio and television stations and the related application processes. License Renewal Applications for Television Broadcast Stations

Supplies a guide to renewing FCC licenses for television stations. Commission Registration System (CORES)

Documents registration requirements for companies doing business with the FCC. Licensees, certificate holders, or entities sending payments to the FCC are considered to be doing business with the FCC and must register with the agency. FCC Licensing Systems

Gives information on filing for an FCC license online.

Transportation and Logistics

Oversize and Overweight Load Permit Information Outlines the maximum weights that are federally mandated for the National System of Interstate and Defense Highways. Back to Top

State Licenses and Permits

Many types of businesses need to obtain some type of business or professional/occupational license or permit from a state government. Select a state to learn about specific license and permit requirements in the area where your business is located.

10 Steps to Hiring Your First Employee

The good news is that business is booming. The bad news is there's only one of you. Perhaps it's time to take the plunge and hire some help. There are many good sources of information about finding the right people, writing job descriptions, interviewing candidates and managing people once they are on board. In addition, you'll need to

understand your regulatory requirements as an employer because it is crucial to the success of your business. These 10 easy steps will help you ensure you are compliant with key federal and state regulations when hiring.

Steps for Hiring Employees 1. Obtain an Employer Identification Number (EIN)

Before hiring employees, you need to get an employment identification number (EIN) form the U.S. Internal Revenue Service. The EIN is often referred to as an Employer Tax ID or as Form SS-4. The EIN is necessary for reporting taxes and other documents to the IRS. In addition, the EIN is necessary when reporting information about your employees to state agencies. To obtain an EIN, you can contact the IRS directly or apply online. U.S. Internal Revenue Service Phone: 1-800-829-4933 Guide to the Employer Identification Number Apply for an EIN Online

2. Set up Records for Withholding Taxes

The IRS states that you must keep records of employment taxes for at least four years. Also, keep good records for your business to help you monitor the progress of your business, prepare your financial statements, identify source of receipts, keep track of deductible expenses, prepare your tax returns, and support items reported on tax returns. The following describes the three types of withholding taxes:

Federal Income Tax Withholding (Form W-4)

Every employee must provide an employer with a signed withholding exemption certificate (Form W-4) on or before the date of employment. The employer must then submit Form W-4 to the IRS. For specific information on employer responsibilities regarding withholding of federal taxes, read the IRS' Employer's Tax Guide .

Federal Wage and Tax Statement (Form W-2)

On an annual basis, employers must report to the federal government wages paid and taxes withheld for each employee. This report is filed using Form W-2 Wage and Tax Statement. Employers must complete a W-2 Form for each employee to whom they pay a salary, wage or other compensation. Employers must send Copy A of Form W-2 to the Social Security Administration (SSA) by the last day of February (or last day of March if you file electronically) to report the wages and taxes of your employees for the previous calendar year. In addition, employers should send copies of Form W-2 to their employees by Jan. 31 of the year following the reporting period. Visit the Social Security Administration's Employer W-2 Filing Instructions and Information for further guidance and assistance.

State Taxes
Depending on the state where your employees are located, you may be required to withhold state income taxes. Visit the state and local tax page for more information.

3. Employee Eligibility Verification (Form I-9)

Federal law requires employers to verify an employee's eligibility to work in the United States. Within three days of hire, employers must complete an Employment Eligibility Verification Form, commonly referred to as an I-9 form. This requires you to examine acceptable forms of documentation supplied by the employee to confirm the employee's citizenship or eligibility to work in the U.S. Employers can only request documentation specified on the I-9 form. Employers who ask for other types of documentation not listed on the I-9 form may be subject to discrimination lawsuits. Employers do not file the I-9 with the federal government. Rather, an employer is required to keep an I-9 form on file for three years after the date of hire or one year after the date of the employee's employment termination, whichever is later. The U.S. Immigration and Customs Enforcement (ICE) agency conducts routine workplace audits to ensure that employers are properly completing and retaining I-9 forms, and that employee information on I-9 forms matches government records. Download Form I-9 (Employment Eligibility Verification) Makes Form 1-9 available for easy access and use. All U.S. employers are responsible for

completion and retention of Form I-9 for each individual they hire for employment in the U.S., including citizens and non-citizens. Instructions for Completing the I-9: Handbook for Employers Offers a comprehensive guide to completing Form I-9, Employment Eligibility Verification. Small Business Guide to Immigration Regulations Provides a summary of immigration laws most important to small business owners, including information about completing the I-9 form. Employers can use information taken from the Form I-9 to verify electronically the employment eligibility of newly hired employees through E-Verify. To get started register with E-Verify to virtually eliminate Social Security mismatch letters, improve the accuracy of wage and tax reporting, protect jobs for authorized workers and help maintain a legal workforce.

4. Register with Your State's New Hire Reporting Program

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 requires all employers to report newly hired and re-hired employees to a state directory within 20 days of their hire or rehire date. Visit the New Hires Reporting Requirements page to learn how to register with your state's New Hire Reporting System.

5. Obtain Workers' Compensation Insurance

Businesses with employees are required to carry Workers' Compensation Insurance coverage through a commercial carrier, on a self-insured basis or through the state Workers' Compensation Insurance program.

6. Unemployment Insurance Tax Registration

Businesses with employees are required to pay unemployment insurance taxes under certain conditions. If your business is required to pay these taxes, you must register your business with your state's workforce agency. The state taxes page includes links to your state's agency.

7. Obtain Disability Insurance (If Required)

Some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury. Currently, if your employees are located in any of the following states, you are required to purchase disability insurance: California - Employment Development Department Hawaii - Unemployment Insurance Division New Jersey - Dept. of Labor and Workforce Development New York - New York State Workers' Compensation Board Puerto Rico - Departamento del Trabajo y Recursos Humanos/Department of Labor and Human Resources Rhode Island - Rhode Island Dept. of Labor and Training

8. Post Required Notices

Employers are required by state and federal laws to prominently display certain posters in the workplace that inform employees of their rights and employer responsibilities under labor laws. These posters are available for free from federal and state labor agencies. Visit the Workplace Posters page for the specific federal and state posters you'll need for your business.

9. File Your Taxes

If you are new employer, there are new federal and state tax filing requirements that apply to you. Generally, each quarter, employers who pay wages subject to income tax withholding, Social Security and Medicare taxes must file IRS Form 941, Employer's Quarterly Federal Tax Return. Small businesses with an annual income tax liability of $1,000 or less may file IRS Form 944, Employer's Annual Federal Tax Return instead of Form 941. You must also file IRS Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, if you paid wages of $1,500 or more in any calendar quarter, or you had one or more employees work for you in any 20 or more different weeks of the year. New and existing employers should consult the IRS Employer's Tax Guide tax filing requirements. Visit the state and local tax page for specific tax filing requirements for employers. to understand all their federal

10. Get Organized and Keep Yourself Informed

Being a good employer doesn't stop with fulfilling your various tax and reporting obligations. Maintaining a healthy and fair workplace, providing benefits and keeping employees informed about your company's policies are key to your business' success. Here are some additional steps you should take after you've hired your employees: Set up Recordkeeping In addition to requirements for keeping payroll records of your employees for tax purposes, certain federal employment laws also require you to keep records about your employees. You may be subject to state recordkeeping requirements as well. Therefore, it's good practice to set up a sound, organized system for maintaining all personnel records. The following sites provide more information about federal reporting requirements: Tax Recordkeeping Guidance Resources and tools aimed at helping employers maintain their tax records. Labor Recordkeeping Requirements Employment laws such as the Occupational Safety and Health (OSH) Act, the Fair Labor Standards Act (FLSA) and the Family and Medical Leave Act (FMLA), have certain recordkeeping and/or reporting requirements. Adopt Workplace Safety Practices The Occupational Safety and Health Administration's (OSHA) Quick Start tool provides a clear, step-bystep guide that helps you identify many of the major OSHA requirements and informational materials that may apply to your workplace. Understand Employee Benefit Plans If you will be providing benefits to your employees, you should become familiar with the uniform minimum standards required by federal law to ensure that employee benefit plans are established and maintained

in a fair and financially sound manner. See the chapter on Employee Benefit Plans in the U.S. Department of Labor's Employment Law Guide for more information. Learn Management Best Practices While you aren't legally required to be a good manager, it sure helps when trying to recruit and retain good employees. Our Guide to Managing Employees provides sound guidance on hiring, motivating and directing employees. Apply Standards that Protect Employee Rights Complying with standards for employee rights in regards to equal opportunity and fair labor standards is a requirement. Following statutes and regulations for minimum wage, overtime, and child labor will help you avoid error and a lawsuit. See the chapter on Laws, Regulations and Technical Assistance Services in the U.S. Department of Labor's Employment Law Guide for information, and FirstStep Employment Law Advisor for advice on federal requirements. Also, visit the Equal Employment Opportunity Commission (EEOC) and Fair Labor Standards Act (FLSA).