KNOWLEDGE BASE US Hiring Options
The information on this page was current at the time it was published. Regulations, trends, statistics, and other information are constantly changing. While we strive to update our Knowledge Base, we strongly suggest you use these pages as a general guide and be sure to verify any regulations, statistics, guidelines, or other information that are important to your efforts.
Hiring Options In The US
There are different options for you to expand your workforce into the US. Each has its own considerations, including the employment laws and regulations that cover it. If you want to jump into Employment Law first, you can get an overview of the regulations that will govern your employer-employee relations. You can review specific details about bringing your foreign employees into the US in the Visa section. The first decision you will need to make is whether to bring your employees from home or hire employees in the US. Below you will find a discussion and the resources available to help you determine whether it is best for you to bring employees with you to the US or to hire employees in the US, as well as resources to help you hire employees in the US, should you decide to go in that direction.
Of course, if you are sending or bringing someone from outside the US, it's very possible you will be required to apply for a visa. We've summarized the possible visas below.
Steps to take when hiring local talent to remain compliant with federal and state regulations
You have many different options for hiring local talent in the US, including: hiring your own employees (full-time, part-time, and fixed-term), hiring through a recruitment agency, and hiring freelancers, consultants, and contractors. Here are eight steps you should take to ensure your compliance with key federal and state regulations during your hiring process.
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Obtain an Employer Identification Number (EIN)
Before hiring employees, you must get an Employer Identification Number from the Internal Revenue Service (IRS). An EIN is necessary for reporting taxes to the IRS and when reporting information about your employees to state agencies. Apply online here.
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Set up records for withholding taxes
The IRS requires that you keep records of employment taxes for at least four years. Keeping good records can also help you monitor your business, including preparing financial statements and tax returns, and keeping track of business expenses. The three types of withholding taxes you need are: 1) federal income tax, 2) federal wage and tax statement, and 3) state taxes. Review the 2023 Employer’s Tax Guide or the state specific information for more employer tax details.
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Employee eligibility verification
Federal law requires that you verify your employees’ eligibility to work in the US. All employers must complete a Form I-9, employment eligibility verification, within three days of hire. This form requires that employers examine documents to confirm an employee’s citizenship or eligibility to work in the US. You are only permitted to to request the documents specified on the form.
You are not required to submit the Form I-9 to the federal government, but are required to keep it on file for three years after the date of hire or one year after the date of the employee’s termination, whichever is later. You should use the information from the form to electronically verify the employment eligibility of newly hired employees.
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Register with your state’s new hire reporting program
You are required to report newly hired employees to your state’s directory within 20 days of their hire date. View the Small Business Administration’s Hire and manage employees for more information and to find links to your state’s New Hire Reporting System.
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Obtain workers’ compensation insurance
If your business has employees, you are required to carry workers’ compensation insurance through a commercial carrier, on a self-insured basis, or through your state’s workers’ compensation insurance program.
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Post required notices
You are required to post certain posters in your workplace that inform your employees of their rights and your (as their employer) responsibilities under labor laws.
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File your taxes
Generally, if you pay wages that are subject to income tax withholding, Social Security, and Medicare taxes, you must file an IRS Form 941, Employer’s Quarterly Federal Tax Return. This form can be filed online. You may also have state tax filing obligations.
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Set up a recordkeeping and organization system
In addition to payroll record keeping obligations (for tax purposes), there are a number of other federal laws that also require that you keep employee records. Below is a list of websites that provide more information about federal recordkeeping and reporting obligations:
Bringing your employees with you
Many companies’ preferred approach to setting up and hiring abroad is to have someone who has been employed at the home office transfer that culture and experience to a new foreign office by setting up the office and hiring the first team abroad. Those employees from home begin to establish important relationships in the US and hire people in the US who will help make the business a success. There are many options for you, as an entrepreneur or business owner, to come to the US or to send current employees to the US to expand your business. These options include both temporary and permanent visas. For more information about your visa options, review the Visa section in the Knowledge Base.
Options to build your team
One of the first decisions you will need to make is whether to hire employees or independent contractors. Most companies choose to hire employees, however many small businesses start out by hiring independent contractors. There is an important distinction between employees and independent contractors, e.g., employer tax withholding and liability implications. It is imperative that you know the difference so you can avoid costly mistakes. The following is a list of the differences between employees and independent contractors:
Employees:
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perform duties dictated or controlled by you (the employer);
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are given training on the work to be done; and
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generally work for only you (one employer).
Independent Contractors:
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operate under a business name (their own business name);
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have their own employees;
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maintain separate business checking accounts;
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advertise their business’ services;
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invoices (you) for work completed;
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work for more than one client;
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have their own tools/equipment
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set their own hours; and
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keep business records.
There is no single test for determining whether an individual is an employee or an independent contractor. Whether a person is an independent contractor or an employee generally depends on the amount of control exercised by the employer over the work being done.
Hiring your own employees in a foreign country is a daunting task. You want to target the right candidates, but not have too narrow of a pool of applicants. Consider looking for employees in the following places:
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Local schools or colleges;
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Local newspapers;
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Online recruitments, such as job websites and social media; and
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Job Centers.
Recruitment Agencies:
You can use recruitment agencies to help you hire permanent and temporary employees in the US. Many recruitment agencies specialize in a particular industry or sector, such as IT, finance, legal, etc. Recruitment agencies are generally well connected and will find candidates that you would not be able to find and approach yourself.
Freelancers, Consultants, and Contractors
In the US you are permitted to hire freelancers, consultants, and contractors. In general, freelancers, consultants, and contractors are not entitled to the same rights as other employees and are responsible for keeping their own business and tax records.
US Small Business Administration
Electronic Employment Verification
Small Business Administration’s Hire and Manage Employees
Labor recordkeeping requirements
KNOWLEDGE BASE US Hiring Options