Are you considering hiring a domestic employee in Connecticut? If so, take these 4 easy steps:
1) Apply for Tax Identification Numbers
To hire an employee you will need to obtain a federal tax identification number. This is done by completing Form SS-4, Application For Employer Identification Number (EIN). This form could be mailed or faxed to the Internal Revenue Service (“IRS”). The fastest way to obtain the number however is by applying online at IRS.gov.
Additionally a Connecticut Employer would need to obtain a tax identification number from the State of Connecticut Department of Labor. This is done by completing Form UC-1A, Employer Status Report for Unemployment Compensation. This form can also be mailed in or prepared online.
2) Have All of the Employees Complete Withholding Forms
All employees must complete Form W-4, Employee’s Withholding Allowance Certificate. This will document the amount of federal income tax to be withheld. Additionally all Connecticut employees must complete Form CT-4, Employee’s Withholding Certificate. This will document the amount of State of Connecticut income tax to be withheld.
Finally, all employees must complete Form I-9, Employee Eligibility Verification. The purpose of the form is to identify and employment authorization of each employee. The employee will need to provide the employer with identification. This could be a passport. Alternatively it could be a driver’s license and their social security number.
The employer must maintain these documents on file. Additionally, they must fax or mail in the CT-W4 to the Connecticut Labor Department within 20 days of hiring a new employee. The purpose of this is to assist the CT DOL with the collection of child support from delinquent parents.
3) Obtain Workers Compensation Insurance
Workers compensation insurance in Connecticut is statutory. This means you must have it. This policy will cover your employees if they get injured on the job. Contact your insurance agent to get a quote and a policy.
4) Obtain a Personal Umbrella Policy
This type of policy acts as a backstop to your personal auto and homeowner’s policy. By having domestic employees you will have potentially more liability. Everyone should have at least $1 million of coverage. These policies are very affordable. A $1 million policy might cost a few hundred dollars. This is very worthwhile.
Will you be hiring a domestic employee in Connecticut?
We are not rendering insurance advice. Consult your insurance agent for insurance advice.
Tom Scanlon has over thirty years experience in public accounting with an extensive background in the areas of financial, tax, and estate planning. He prides himself on providing in-depth and customized solutions to privately held businesses and their owners. He is a Certified Public Accountant and Certified Financial Planner®. Tom is a frequent speaker for area organizations and has recently been quoted on CNBC, Fox 61 News and AARP's blog. Tom also has been a guest columnist for numerous publications including The Wall Street Journal, Barron's, Money Magazine, The Hartford Courant, The Hartford Business Journal, and The New Haven Register. He is a member of the American Institute of Certified Public Accountants, the Connecticut Society of Certified Public Accountants, and the Financial Planning Association. Active in the community, Tom supports a variety of not-for-profit organizations.
