While it is important to hire permanent employees that remain at your business throughout the year, seasonal employees are crucial to businesses for their functioning. Seasonal employees are usually needed when business gets busy during certain times of the year, such as the holidays or something else that corresponds to the business.
Not every business requires seasonal employees at the same time. For example, retail, agriculture, tourism, and food industries hire them at different times of the year. Seasonal employees may work with you for a limited time, but they are still counted as your employees. Their work may seem similar to part-time but is quite different. Speak to a tax accountant in Troy, MI, to discuss the tax implications of seasonal employees’ payments.
Things you should know if you hire seasonal employees.
- Seasonal employees are required to file their taxes as well.
Even though these people are only going to work for you for 120 days or less, they still must file their taxes if they fall into one of the following categories:
- They are of eligible employment age.
- They are single filers.
- They earn more than $10,400 per year.
Make sure that they also file the W-4 form because you, as their employer, would require this form when you do your business taxes later. In simpler words, if your employee, regardless of whether they are seasonal or not, receives at least $20 per day, then they are required to fulfill their taxing obligations.
- You may or may not have to offer benefits to seasonal employees.
Depending on which state you reside in, you may or may not have to offer the following benefits to seasonal employees:
- Social Security
- Workers’ compensation insurance
- Unemployment insurance
The fringe benefits such as paid time off or medical insurance are not required to offer to seasonal employees. It depends on your company whether you want to offer these benefits.
In Michigan, the employer must inform the seasonal employee beforehand about the benefits they will receive.
- You must withhold taxes from the paychecks of seasonal workers.
Regardless of whether the employee is seasonal or not, you should withhold taxes from their payments. Determine a withholding method for employees working for 245 days or less. This allows you to calculate the taxes based on the period of time they have worked instead of using the same calculation method for a 12-month employee.
When you use the same calculation method you use for regular employees, then your seasonal employees will have more amount in taxes.