After you have your tax numbers in place, you can start hiring employees. Along with your newly minted federal and state EINs, you also get the official government publications that describe your duties as an employer and the rules for employees.
There are strict definitions about whether someone is an employee or a contractor. For employees, you need to pay benefits as well as part of the employee’s Social Security and Medicare taxes. Independent contractors must pay for their own benefits as well as all of their Social Security and Medicare taxes.
If you are a small business and plan to hire both employees and independent contractors, be sure you understand the rules for both. Whether the IRS determines that your workers ...