Hiring an Employee in Florida

When you are ready to hire your first employee there’s a lot to consider.  While it will definitely free up some time to help you concentrate on growing your business, it also adds a lot of complications.  However, as long as you follow a few simple rules and set up a system to comply with those rules, you can lessen the administrative burden.

Here are a few things you need to know before you sign your first paycheck.

Federal Requirements

1. Federal withholding taxes - Employers generally must withhold federal income tax from employees' wages. To figure out how much tax to withhold, use the employee’s Form W-4 and the withholding tables provided by the IRS.
2. Social Security and Medicare taxes - Employers generally must withhold part of social security and Medicare taxes from employees' wages and you pay a matching amount yourself.  The tax rate for social security is 6.2% and for medicare is 1.45%. 
3. Federal Unemployment taxes - Employers report and pay FUTA tax separately from Federal Income tax, and social security and Medicare taxes. You pay FUTA tax only from your own funds. Employees do not pay this tax or have it withheld from their pay.  The FUTA tax is .08% is paid on the first $7,000 of wages for each full and part time employee of the company.
4. Federal Tax Deposits – If your total tax liability (federal taxes withheld plus social security and medicare taxes withheld plus the company’s matching social security and medicare taxes) is less than $2,500 per quarter, then you are not required to make payments until the month end following the end of each quarter.  If your tax liability is greater than $2,500, then you must generally make your deposits by the 15th of the month following the end of the month just ended.  If your total tax liability for your company exceeds $50,000 during the year, then you must make deposits on a semi-weekly basis.
5. Payroll Tax Returns – 941 Employer Payroll Tax returns must be filed each quarter by the end of the month following the end of each quarter.  940 Federal Unemployment Returns are filed at the end of each calendar year.  W-2s must also be issued to each employee by January 31st for the preceding year.

State Requirements

1. Reemployment (Unemployment) taxes – All Florida employers must file and pay Florida Reemployment taxes on all of their employees.  The tax rate for new employers is 2.7% for the first $8,000 of wages.  This rate will go down based on the claims filed by employees who no longer work for your company.  A Form RT-6 must be filed each quarter to report wages and remit the required taxes.
2. New Hire Reports - State law requires employers to report employees who are newly hired and re-hired in Florida to the Florida New Hire Reporting Center. New hire reporting speeds up the processing of child support income withholding orders and the collection of support from parents who change jobs frequently. It also helps prevent overpayments of reemployment assistance to persons who have returned to the workforce.

Worker’s Compensation

In Florida, most companies are required to pay workers compensation premiums if you have four or more employees.  Any owners that own at least 10% of the company are not counted towards the employee total.  If you are in the construction industry, you must provide workers compensation if you have one employee or more, and unfortunately the owners and officers do count towards the employee total.

Payroll Companies

After reading through all of the requirements, you might wonder if it’s worth all of the hassle.  Luckily, there are ways to outsource most of the hassle.  The hard part is picking the right partner.  There a lot of options these days from payroll companies like ADP and Paychex, banks, quickbooks, or accountants.  Each service has its own positives and negatives, and you need to make the decision that works best for your business.    To find out more about my payroll system, click here.

Please contact us today for a free consultation to see how we can help you with your tax and accounting needs!