Are you considering hiring employees for the first time in Idaho? As a small business owner, hiring is an exciting prospect. Just make sure you set yourself up for success by familiarizing yourself with state labor laws, employer taxes, and the hiring process.
Here are six steps to hiring employees in Idaho:
Step 1: Handle new employer logistics
Being a business owner is different than being a business owner and an employer. Here’s what you need to do before you hire employees:
Apply for a federal employer identification number (EIN) on the IRS website
Obtaining a federal employer identification number (EIN)—also called a federal tax ID—from the Internal Revenue Service (IRS) is the first step to take. You need an EIN to pay federal withholding taxes and register as an employer with your state department.
Fortunately, if you’ve already registered your business as a partnership, multi-member limited liability company (LLC), C corporation, or S corporation, you have an EIN. But if you have a sole proprietorship or single-member LLC, set aside 10 minutes to apply for an EIN on the IRS website.
Register with the Idaho Department of Labor to pay withholding taxes
Idaho law requires employers to withhold state income tax from each employee’s wages. To pay withholding taxes, you have to apply for a withholding account number with the Idaho Department of Labor, the Idaho Industrial Commission, and the Idaho State Tax Commission.
Create an account using the Idaho Business Registration System (IBRS). You’ll need to provide your EIN, Social Security number, business address, date of business incorporation, and information on your expected employee count and dates of hire.
Register with the Idaho Department of Labor to pay unemployment insurance taxes
The Idaho Department of Labor runs the state’s unemployment insurance program, which requires Idaho employers to pay unemployment insurance taxes on a regular basis. These taxes go toward supporting Idaho workers who become unemployed through no fault of their own.
You can register using the IBRS. You should already have an account from the step above, so just make sure to follow the instructions for registering for unemployment insurance taxes.
For additional information on unemployment insurance, read the Idaho Unemployment Insurance Tax Information handbook for employers or contact an unemployment tax representative to ask questions.
Register for Idaho workers’ compensation insurance
Idaho’s Industrial Commission requires employers with at least one part-time, full-time, seasonal, or occasional employee to obtain workers’ compensation insurance. Workers’ compensation coverage is designed to provide financial support to employees who get injured at work, while also providing some legal protection to the employer.
You have four options for getting workers’ compensation insurance in Idaho:
- Search for a private insurance carrier in the state.
- Contact the State Insurance Fund, which is headquartered in Boise.
- If you can’t get insurance from a private carrier or the state insurance fund, you might be able to apply through the assigned risk pool, which the National Council on Compensation Insurance (NCCI) administers. Contact NCCI at (800) 622-4123 for more information.
- Certain qualified Idaho employers with large payrolls can apply for self-insurance.
For more information, read the Idaho Industrial Commission’s employer FAQs.
Once you get workers’ compensation insurance, learn how to optimize your policy.
Step 2: Understand your hiring costs and tax liability
As an employer in Idaho, you’ll have to pay for your employee’s compensation package, federal taxes, and state taxes. Here are the employer-specific payroll taxes to plan for:
- FICA taxes: The Federal Insurance Contributions Act (FICA) requires employers to pay a share of Social Security and Medicare taxes. Social Security tax rates are 6.2% for the employer and 6.2% for the employee, while Medicare tax rates are 1.45% for the employer and 1.45% for the employee.
- State unemployment insurance (SUI) taxes: Employers are also subject to annual SUI taxes, which vary from state to state. For new employers in Idaho, the tax rate is 1% on the first $49,900 of an employee’s wages.
- FUTA taxes: The Federal Unemployment Tax Act (FUTA) is a federal unemployment program in which employers are obligated to participate. The FUTA tax rate is 6% of the first $7,000 of employee wages. However, if you pay your SUI taxes on time and in full, you can get a credit on FUTA taxes of up to 5.4%, lowering your FUTA tax liability to 0.6%.
- Federal income withholding taxes: All employers use Form W-2 to file federal income tax withholding reports to the IRS. You’ll also file Form 941 on a quarterly basis and Form 940 annually.
- State income withholding taxes: All Idaho employers have to withhold state income from employees’ wages and make regular payments. Learn more about withholding due dates, filing processes, and required forms on Tax.Idaho.gov.
If you want more insight into the total cost of hiring, including paying for recruiting expenses, use Gusto’s handy hiring calculator to create a realistic hiring budget.
Need help calculating paychecks and withholdings for your employees? Use Gusto’s Idaho hourly paycheck and payroll calculator and Idaho’s salary paycheck and payroll calculator.
Step 3: Check Idaho labor laws
Take the time to review federal labor laws and Idaho state labor laws before you begin searching for job candidates. Employment laws affect your recruiting process, employment practices, workplace policies, and employee compensation package.
In addition to knowing the difference between full-time employees and independent contractors, it’s also important to understand Idaho state law around pay equity, wages, and leave.
Below are a few key labor law topics from the Idaho Department of Labor:
- Minimum wage: The Idaho minimum wage is currently the same as the federal minimum wage: $7.25/hour.
- Overtime: Per federal law (under the Fair Labor Standards Act, or FLSA), non-exempt Idaho employees who work more than 40 hours in a workweek must be paid overtime pay at a rate of 1.5 times. Learn more about Idaho’s wage and hour laws.
- Pay frequency: Idaho employers are required to pay employees at least once a month on a regularly scheduled payday. Employees who are laid off or who quit must be paid the wages owed to them on the next regularly scheduled payday.
- At-will employment: The state of Idaho is a work-at-will state. As an employer, you have the right to fire employees at any time without reason or cause. Your employees also have the right to leave their jobs at any time without reason or warning.
- Right to work: Idaho is a right-to-work state, which means Idaho employees can’t be forced to join a union or pay union dues. Also, Idaho employers can’t discriminate against job candidates and employees based on whether or not they’re part of a union.
- Leave: There’s no employment law in Idaho that requires employers to provide sick leave, paid jury duty leave, bereavement leave, voting time leave, or vacation. What you offer your employees is up to you, but keep in mind that offering employee benefits like paid time off and healthcare makes it easier to fill job openings and keep employees happy at work.
- Paid leave: Under Idaho’s Families First Act, Idaho government employees are eligible for up to eight weeks of paid parental leave following the birth or adoption of a child. If you don’t employ government employees, the law doesn’t apply to you. However, your company is still subject to the federal Family and Medical Leave Act (FMLA), which requires you to offer up to 12 weeks of unpaid job-protected leave to employees for certain qualifying conditions.
- Discrimination laws: Under the Idaho Human Rights Act, employers cannot discriminate against employees on the basis of race, color, sex, national origin, age, or disability.
- Pay equity: Idaho law makes it illegal for employers to pay an employee less than another employee of the opposite sex for comparable work.
For more information, read Idaho’s FAQs on labor laws.
Step 4: Fill out the Idaho new hire reporting form
When you hire a new employee in Idaho, you need to give information about that employee to the state. New hire reporting is a national system used primarily to find non-custodial parents who are late on their child support payments.
In Idaho, you have to report newly hired employees and rehired employees (whether they’re part-time, full-time, or seasonal workers) to the Idaho Department of Labor within 20 days of the employee’s official date of hire. The hiring date is the first day an employee performs payable services or is able to earn a commission.
When reporting employees, you’ll provide your employee’s name, address, Social Security number, date of birth, and work start date, as well as your business information.
There are three common new-hire reporting methods in Idaho:
- Report new hires online by signing into Idaho’s New Hire Directory.
- Use your employer portal to submit records.
- Mail or fax a completed Idaho new hire reporting form to the address below:
Idaho Department of Labor
New Hire Reporting
317 W Main St
Boise ID 83735
Fax: (208) 332-7411
For more information, read Idaho’s new hire reporting FAQs.
Step 5: Complete other hiring documents
The new hire reporting form isn’t the only hiring document you need to fill out as a new employer. You should also take the time to gather and complete other key hiring documents, including:
- Employment contract: Employment contracts give new employees valuable information about their job responsibilities as well as your business’s pay structure, workplace policies, and employee handbook rules.
- Form I-9: Form I-9, the Employment Eligibility Verification Form, verifies that employees are able to work in the US. As an employer, you have to complete the I-9 form for every employee you hire, and each employee has to attest to their employment authorization. You don’t have to file Form I-9 with the US Citizenship and Immigration Services (USCIS) or Immigration and Customs Enforcement (ICE). Instead, just hold onto the form as a record for at least three years from the date of hire or from one year after employment ends. You can download Form I-9 and read the completion instructions here.
- Form W-4: New employees should complete IRS Form W-4, The Employee’s Withholding Certificate, on or before the first day of their employment. You use the W-4 form to determine how much federal income tax to withhold from your employees’ paychecks. Download the form.
- Form ID-W4: You also need to give new employees Form ID-W4, the Idaho Employee’s Withholding Allowance Certificate, to fill out.
Don’t forget to save copies of all your documents as part of your business’s records.
Step 6: Display labor law posters and required notices
The Idaho Department of Labor requires employers to post labor law signs in the workplace listing basic employee rights and workplace obligations. Labor posters typically cover a range of critical topics from the state’s minimum wage and hour laws to anti-discrimination notices.
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