Are you a new business owner, small business owner, or independent entrepreneur planning to hire employees? Perhaps you are confused about where to start? How much tax should you withhold from your wages? What are you responsible for as an employer? Let me help you figure out the basics.

The three basic forms you need for your new employees to complete are:

* Federal Form W-4, so they can indicate their filing status and the number of exemptions they want to withhold from their paycheck

* Form I-9 to verify your identity (be sure to keep a copy of your state or government issued ID on file) and

* Your respective state W-4 form (check with your state department of revenue). For example, in New York, employees must complete form IT-2104 to indicate their filing status and the number of exemptions they wish to have at the state level.

Check with your state Department of Labor to find out how to register as an employer. Once registered, you will be required to report all new hires. Find out if there are any additional requirements regarding Unemployment Insurance, etc.

The standard taxes that must be withheld from each paycheck are:

*Federal taxes

* Social Security (for 2011 this rate is 4.2% on the first 106,800% of the worker’s income). The employer portion is 6.2% and is paid quarterly.

* Medicare tax (1.4% of employee earnings. Employer portion is also 1.4% and is paid quarterly.

*State income tax

*Local Income Tax if applicable. For example, in New York City, employees must pay local income taxes.

* If applicable, you may also be required to withhold UI (Unemployment Insurance) and/or SDI (State Disability Insurance).

Quarterly Presentations – File Federal Form 941 with the IRS and check with your State Department of Revenue to find out which forms you must file each quarter.

Annually – file Federal Form 940 with the IRS and file Federal Form W-2 and transmittal form W-3 with Social Security and be sure to give your employee(s) their copies of Form W-2 at no later than January 31 of the following year.

It is important that you keep adequate records to comply with the IRS, and you will need this information at tax time. It would be to your advantage to establish an employee database.

Means: You may want to download the IRS Employer’s Tax Guide, Publication 15 from the IRS website.