June 1, 2015

Tips for Summer Hiring

By Richard Lo - Senior, Tax & Business Services

Related Service Tax & Business

Tips for Summer Hiring Tax & Business

As summer approaches, businesses often need to hire seasonal or part-time workers to help them through those busy months.

If that applies to your business, here are a few pointers to keep in mind:  

  • Wages, regardless of the amounts, are reported on Form W-2, not on Form 1099.  Be sure to carefully review each new hire to determine if they are classified properly as either – employee vs independent contractor.

  • All employees, including an owner’s children and U.S. or foreign students working part-time, need to fill out a Form W-4.  Employers will use the form to calculate how much federal income tax to withhold from the paychecks, unless withholding exemption is claimed.

  • Employers usually must withhold FICA from all employee wages, even high-school students and those who receive Social Security benefits.  However, FICA does not apply to services performed by students employed by a school, college, or university where the student is pursuing a course of study.

  • In a 100% parent-owned sole proprietorship or partnership, the wages of the owner’s children are exempt from FICA tax if the children are under 18 years of age and are also exempt from FUTA if they are under 21.

  •  In general, part-time and summer seasonal employees are subject to the same labor laws as full-time employees and must be paid minimum wage and overtime.  The current federal minimum wage is $7.25 per hour, effective July 24, 2009.  (The State minimum may differ.)

  • Under the federal Fair Labor Standards Act (FLSA), payments for time not worked, e.g. vacation pay or holiday pay, are not required. However, if you do provide paid vacation or holidays, some federal and state laws do apply.

  • For those who work on a temporary or part-time basis, benefits are optional. If benefits are offered, be sure to explain it in a written benefits plan.

  • Always check the state laws.

For more information, please consult with your tax advisor at Marcum LLP.