Can I hire employees if I'm a sole Proprietor?
YES a sole prop can hire employees. You do have a Federal I D Number.
A Sole prop is the most common form of business organization.
Yes, as a sole propreitor, you can hire employees. Just be sure to keep accurate payroll records because when it becomes time to complete and file your tax return, you will need to report the amount of wages paid, as well as the amount of payroll taxes paid on the wages. This reporting will be done on Schedule C when filing your Federal Form 1040. Also, once you begin hiring employees, you will be responsible for filing Employer Tax Returns on a Quarterly and Annual basis. You may want to view Publication 15 "Employer's Tax Guide" on the IRS website www.irs.gov.
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I've always used payroll companies to manage my payroll accounting. The cost is meager compared to the service provided. Usually about $25 per payroll but they take care of all the details. Most importantly, the quarterly filings are always done accurately and on-time + W-2's and accurate withholding are taken care of.
Depending on what type of business you are in, changing to a corporation may insulate you from liability and be a sound tax strategy for paying yourself. Talk to your accountant and see what is best for your business.
Congrats on creating jobs! Our Country is in depserate need of small business creating jobs again.
You can definitely hire employees as a Sole Proprietor. But regardless of whether you're a Sole Proprietor, an LLC, or a Corporation, it is important to have your employees complete the right forms and it is important that you understand your obligations as an employer. I wrote an article that covers these areas. http://bit.ly/nkZbXH