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FS#2: When You Hire Employees for Your Family or Group Family Day Care Program

What follows is basic information about what you need to do when you hire new staff in your day care program. This fact sheet describes:

  • How to get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS), and an Employer Registration Number (ERN) from New York State (NYS);
  • How to verify that your employee is legally permitted to work in the United States;
  • Which forms your employee must complete and return to you, so that you know how much income tax to withhold from her wages each payroll period.

WHO IS AN EMPLOYEE?

In general, someone who works for your day care program is your employee if you control what tasks she will do and how she does her job. For example, you have control over what work is done and how the work is performed by your assistant, on-site provider, or alternate assistant.

The IRS determines if your worker is an employee or not, no matter what job title you give to your worker. Some of the factors the IRS considers include:

  • Do you tell the worker how to do her job?
  • Does she get paid on a periodic basis (i.e. weekly, monthly)?
  • Do you set her work schedule?
  • Does her job involve key functions of your day care program?

Your substitute may be considered an independent contractor, instead of an employee, particularly if she works for you only occasionally.
If you have questions about whether a worker is your employee or an independent contractor, call our Child Care Project hotline at 718-237-5540.

BEFORE YOU HIRE ANY EMPLOYEE
1) Get an Employer Identification Number (EIN)

An EIN is a 9-digit tax identification number, issued to you by the IRS. An EIN identifies your business for tax purposes. You will use the EIN to report income earned from your business, and to pay taxes you withhold and set aside. There are four ways to get an EIN:

Internal Revenue Service, Attn: EIN Operation, Cincinnati, OH 45999

The first 3 options will be much faster!

2) Get a New York State Unemployment Insurance Employer Registration Number (ERN)
The ERN is an 8-digit identification number, issued to you by New York State, for unemployment insurance purposes. You must have your EIN before you can receive the ERN! There are three ways to get an ERN:


Department of Taxation and Finance and Department of Labor-Unemployment Insurance Div. Reg Sec
WA Harriman State Campus, Bldg. 12
Albany, NY 12240-0339

Remember! Use your ERN on documents for NYS about unemployment insurance. To report and pay all income taxes you withhold, use your EIN from the IRS.

WHEN YOU HIRE AN EMPLOYEE
3) Have your employee complete Form I-9 (también en Español), to check her eligibility to work legally in the United States. Be aware that it is discrimination to ask for someone’s immigration status.

Keep the Form I-9 in your files for at least three years after your hire your worker, or one year after she stops working for you (whichever is later). Do not send in the form to the United States Citizenship and Immigration Services (USCIS) or to anyone else!

4) Have your employee fill out IRS Form W-4, Employee’s Withholding Allowance Certificate (también en Español). You need this form completed to determine how much money to withhold each pay period for her income taxes.

Keep the form in your employee’s file. Do not send this form to the IRS, unless:

  • an employee claims more than 10 allowances, OR
  • she claims to be exempt from income tax and you pay her more than $200 per week.

NOTE: If an employee asks you to change the amount withheld during the year, you must allow her to complete a new Form W-4.

5) Have your employee complete NYS Form IT-2104 only if she wants to claim a different number of allowances for New York State and City income tax withholding purposes.

Keep the Form IT-2104 in your employee’s file. Do not send it to New York State unless your employee claims more than 14 allowances.

NOTE: If an employee asks you to change her withholding during the year, you must allow her to complete a new Form IT-2104.

6) You must report your new hire to the New York State Department of Taxation and Finance, within 20 days of the date your employee starts to work. There are three ways to report your new hire:

  • Fax: Fax your employee’s completed Form W-4 to 518-869-3318
  • Mail: Send the completed Form W-4 to:

New York Department of Taxation and Finance
New Hire Notification
P.O. Box 15119
Albany, New York 12212-5119
You need your EIN in order to report via the Internet!

For more information on getting started with your newly hired employees, please see Publication 15 from the IRS, and Publication NYS-50 from New York State. You can also call our Child Care Project hotline at 718-237-5540.

This article was posted February 17, 2010