How Do I Make Myself An Employee Of My Own Company?
August 2, 2023
To make yourself an employee of your own company, follow these steps:
Choose the Right Business Structure – Ensure your company is registered as a legal business entity. Common business structures include sole proprietorship, partnership, limited liability company (LLC), and corporation. The structure you choose will determine how you become an employee and how you pay yourself.
Obtain an Employer Identification Number (EIN) – If your business is not a sole proprietorship and has employees (including yourself), you’ll need to obtain an Employer Identification Number (EIN) from the IRS. You can apply for an EIN online through the IRS website.
Set Up Payroll – If you plan to pay yourself a regular salary or wages, set up a payroll system for your company. You can use payroll software or outsource payroll services to handle payroll processing, tax withholding, and other payroll-related tasks.
Define Your Role and Compensation – As an employee of your company, define your role, responsibilities, and compensation. Determine a suitable salary or wage based on market rates and your business’s financial capacity. Be sure to comply with your jurisdiction’s minimum wage requirements and employment laws.
Sign Employment Agreement – Create an employment agreement that outlines the terms and conditions of your employment. Include details such as your job title, duties, salary, benefits, working hours, and other relevant words.
Register for Payroll Taxes – As an employer, your company is responsible for withholding and paying payroll taxes on behalf of its employees. Register with the appropriate tax authorities for payroll taxes, such as Social Security, Medicare, federal income tax, state income tax, and any applicable local taxes.
Pay Yourself Regularly – Once your payroll system is set up, pay yourself on a regular schedule, just like you would with any other employee. Be consistent with your pay frequency, whether weekly, bi-weekly, or monthly.
Keep Payroll Records – Maintain accurate and up-to-date payroll records, including pay stubs, tax withholdings, and payroll tax filings. Good record-keeping is essential for tax compliance and financial transparency.
File Payroll Tax Returns – As an employer, you must file payroll tax returns, such as Form 941 (Quarterly Federal Tax Return), with the IRS and other relevant tax authorities on time.
Stay Compliant – Stay informed about employment laws, tax regulations, and labor standards for your business. Comply with all legal requirements to avoid penalties and legal issues.
