You’ve established a business as a sole proprietor in Vermont. Even better – you’re growing and need to hire your first employee. Below are the steps you need to take to comply with Federal and State laws. 

A few things upfront. First, if you’re not registered as a corporation or LLC, we strongly recommend you consider changing your registration. Next, employers with more than ten employees have specific record-keeping requirements. If you are hiring a slew of employees at once (yay Vermont jobs!) check out the OSHA site.

1. Federal requirements – What you must do for yourself as an employer

a.   Obtain a Federal Employer Identification Number (EIN).  The EIN gives your business a unique identifier instead of your social security number.  You can apply for an EIN here.

b.   Enroll in the Electronic Federal Tax Payment System (EFTPS) to make Federal tax payments (social security, Medicare, Federal withholding).  Alternately, you can contact your bank to enroll in your bank’s service to make tax payments under the Electronics Federal Tax Payment system. 

c.   Complete and file Form 941 – Employer’s Quarterly Tax Return. This determines amounts you must deposit for social security, Medicare, and Federal withholding taxes. It also determines if you deposit on a semi-weekly or monthly basis.

Note: Form 944 is designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes is $1,000 or less) will file and pay these taxes only once a year instead of every quarter.

d.   Complete and file an Employers Annual Federal Unemployment Tax (FUTA) return. The FUTA tax provides funds for paying unemployment compensation to workers who have lost their jobs, and cannot be deducted from employees’ wages.

e.   Complete and file Form W-2 Wage and Tax Statement and Form W-3 Transmittal of Wage and Tax Statement.  This can be done electronically.

Additional information is available at Publication 15 (Circular E) which defines employees, wages and supplemental wages. Also Publication 15-A provides supplemental information, and Publication 15-B provides a guide to taxability and non-taxability of fringe benefits.

2. Federal requirements – What you must do for employees

a.   Your employee must complete Form I-9 for Employee Eligibility Verification. 

b.   Your employee must fill out Form W-4 for income tax withholding. 

c.   Hold onto these forms for your records.

3. State requirements – Department of Taxes

There are two different accounts to set up with the Vermont Department of Taxes:

a.   Set up a Business Tax Account on the SoS Online Business Portal. This will register your business to withhold tax on employee paychecks. You may already have an account if you collect sales & use or meals & room taxes.

b.   Set up a myVTax account, which allows you to make online filings for all state taxes. 

c.   Calculate State withholding tax. Complete and file Form WHT-436 Quarterly Withholding Reconciliation or Form WHT-434 Annual Withholding Reconciliation on the appropriate due dates.

Note: All businesses should file Form WHT-436 with the State quarterly. Payment frequency to the State will mirror your Federal payment frequency; for example, if you are required to pay your Federal Withholding Tax semiweekly, you are required to pay the Vermont Withholding Tax semiweekly.

4. State requirements – Department of Labor

a.   Register with the Department of Labor to determine if you are liable for unemployment insurance contributions.

• If so, register with the Vermont Internet Tax and Wage System to make Quarterly Wage and Contribution Reports.

            b.   Establish and maintain a worker’s compensation policy

• You will need to get a worker’s compensation policy through a private insurer. Your insurer will notify the National Council on Compensation Insurance (NCCI), which will include you on an online database the State can refer to if complaints are received about your business.
• If your business is structured as a corporation or an LLC, you may elect to exclude up to four corporate officers or LLC members.  In order to do so, you must file a Form 29 with the Vermont Department of Labor.
   

c.   Print out and post the mandatory posters from the Department of Labor website — and familiarize yourself with each one.

d.   Within 10 days of the employee starting work, fill out a New Hire Report.

5. Paying your first paycheck

a.   Calculate the employee’s wage due.

b.   Calculate Federal and State taxes to deduct from wage due. Refer to:

• Federal Tax Form 941 (step 1c)  
• W-4 filled out by your employee (step 2b)
• Vermont Department of Taxes Withholding Instructions

c.   Deduct taxes from wages due.

d.   Sign and issue the paycheck.

6. Mark your calendar

Bi-Weekly  

• Deposit social security, Medicaid and Federal withholding taxes via EPTPS.
• Pay State withholding taxes, if applicable.

Monthly

• Vermont Department of Taxes returns must be postmarked or filed by the 25^th of the reporting period (except by the 23^rd in February).
• Vermont Department of Labor Unemployment Insurance payments are due at the end of the month following the reporting period.

Quarterly

• Federal Tax Form 941 – Employer’s Quarterly Federal Tax Return
• State Tax Form WHT-436 – Quarterly Withholding Reconciliation
• State DoL Quarterly Wage and Contribution Report

Annually

All returns are due by January 31^st, including:

• Federal FUTA returns
• 1099-miscellaneous returns for payments over $600 to individuals (NOT employees)
• Federal Form W-3 and Federal Form W-2, with a copy of the W-2 to each employee
• State Form WHT-434 Annual Withholding Reconciliation

Businesses are encouraged to speak with an accountant and/or attorney to assure compliance. These folks can also help with best practices and policies for: the hiring process, personnel issues, recordkeeping and insurance. 

Questions on the information above can be referred to:

• Secretary of State | Corporations Division | 802-828-2386 | sos.corporations.support@sec.state.vt.us
• Department of Taxes | Business Division | 802-828-2551 | tax.business@vermont.gov
• Department of Labor | Employer Services | 802-828-4344 | labor.uiandwages@vermont.gov

Disclaimer

The Landlord Restoration Program (Program) launched in 2017 by the Attorney General’s Office and the Department of Health. The Program provided: (i) information and resources to landlords, (ii) extended time for repairs, and (iii) a waiver of state enforcement for past non-compliance. The Program, which concluded in 2018, was piloted in five Vermont towns that had elevated blood lead levels in children: Rutland, Bennington, Bellows Falls/Windsor, Barre, and St. Albans. Compliance rates suggest that the pilot program was effective in increasing property owner compliance. Compliance rates went up by an average of 14%, with several towns seeing around 20% increases. 

A copy of the complete report on the Landlord Restoration Program can be found here.

If you are EMP certified, or have an inspector who is EMP certified, you can comply right away by completing your EMPs and filing your statement immediately:

File your annual EMP Compliance Statement

I can’t complete the EMPs right now. What can I do to get in compliance?

Here are steps you can take to get in compliance with Vermont’s Lead Law:

1. Get EMP certified or hire an EMP contractor
2. Do your EMPs
3. File your EMP compliance statement

When do I perform EMPs?

EMPs are annual obligations.  Each year you must inspect your rental property and safely repair deteriorated paint. If you receive a letter to comply within 30 days from the Department of Health, you can request an extension by completing the Department of Health’s Extension of Time form.

How do I perform EMPs?

You can become EMP certified yourself, or hire an EMP contractor, visit: www.leadsafevermont.org. Beware of shortcuts! Make sure your EMP statement is accurate before you file. There are significant penalties for falsely certifying EMP compliance.

My property has been gutted and renovated. Does the law still apply to me?

Yes! If your building has been restored, it still may contain lead. To exempt you from annual EMP filings, a third-party contractor must perform an inspection and prepare a report. This generally costs $500-$1000, and you may be eligible for financial assistance if you rent to low or moderate-income tenants.

You can find information here on hiring a lead contractor, and here is information for lead contractors.

What if a tenant makes a complaint against me for a lead violation?

If you come into compliance voluntarily, there will be no State enforcement for past noncompliance. However, the state cannot waive a private claim a tenant may have.

What if I don’t file an EMP statement?

Failure to comply with the lead law, may leave you exposed to a complaint or future enforcement action. Our goal is to support the efforts of Vermonters who wish to comply with the law.

Questions?

Contact the Vermont Dept. of Health, Asbestos & Lead Regulatory Program, by phone at 802-863-7220 or online at www.healthvermont.gov

Disclaimer

What if an employee becomes pregnant?
Pregnancy or childbirth may limit a woman’s ability to perform a job. Under Act 21, employers must provide reasonable accommodations to such women, unless those accommodations would be an undue hardship on the employer.

What if the job involves heavy lifting?
The employer must provide reasonable accommodations, such as providing lifting equipment. 

What is an “undue hardship”?
An “undue hardship” is an accommodation that would be significantly difficult or expensive to put into place. 

What if the woman can no longer perform the essential functions of the job?
The employer must engage in an ongoing discussion with the employee to explore different options that may accommodate the employee so that she can perform the essential functions of the job.  At the end of the day the employee must be able to perform the essential job functions, with or without accommodations.

When does this law take effect?
January 1, 2018.

Beware: existing disability law has the same requirements.  As an employer, you should provide reasonable accommodations to women with limitations caused by pregnancy, childbirth and related issues.

What are the penalties for failure to provide accommodations?
All the sanctions of the Fair Employment Practices Act, including damages and attorney’s fees. 

Disclaimer