Doing Business in Burlington:  Employees & Related Taxes
 

Federal

(except where noted all forms available at www.irs.gov)

• File form SS-4 and obtain an Employer Identification Number (EIN).
• Each employee must fill out a W-4, the employee withholding form, and an I-9 Employment Eligibility Verification form.
•  For each pay period (weekly, bi-monthly or monthly, etc.), you need to calculate and deduct employees' income tax, social security and Medicare amounts.  Five to six weeks after you file an EIN, the IRS will send you a coupon book with forms for making these payments.  Each quarter you'll file a form 941 to report your payments.
• Shortly after the end of the calendar year, you'll file a Wage and Tax Statement (W-2) form for each employee and a Transmittal of Wage and Tax Statement (W-3) form.  You'll also file form 945, the Annual Return of Withheld Federal Income Tax.
• Some businesses, such as those with employees who receive tips, are required to file additional information.  Check with your tax accountant or visit www.irs.gov.
• If you are self-employed (no employees), you must pay the self-employment tax.  Use schedule SE with your annual 1040 tax return.  See www.irs.gov for information.

State

(except where noted all forms and instructions are available at www.state.vt.us/tax or call 802·828·2551)

• When you file an S-1, Vermont Application for Business Tax Account, you need to request a withholding tax account if you plan on employing.  The State will send you an Employer Withholding return booklet for reporting along with a schedule and formula for calculating the deductions.
• Each employee must fill out form W-4VT.
• As an employer, you must file wage reports on a quarterly basis even if no wages were paid in a quarter.  An Employer's Quarterly Wage & Contribution Report (form C-101) is mailed to each taxable and reimbursable employer during the last week of each calendar quarter.
• Workers Compensation insurance must be purchased.  Contact an insurance agent.  For information on Workers Compensation, visit http://www.labor.vermont.gov or call 802·828·2288.
• Check with VOSHA (Occupational Health & Safety) for additional regulations that may apply to your company.  Call 802·828·2288.

Advice

Have a conversation with a tax accountant.  Consider hiring a professional for your tax needs.   You might save a bundle in aspirin costs.  Also an alternative to managing your company's payroll and tax filings would be to hire a payroll service to handle all your employee-related tax documents.