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Complete Guide to Managing Employee Paperwork

Keep your human resource operations running efficiently. These essential, customizable human resources documents will help you hire, employ and terminate employees with ease.

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Step 1

Employment Offer Letter

An Employment Offer Letter is used by an employer to formally present a job opportunity to a new employee. The letter includes employment details, suc...

Category Featured Contract Icon

Step 2

Employment Contract

An Employment Contract sets out employment terms, conditions, and expectations between an employer and employee.

As an employer, you need specific paperwork to hire and manage employees. Creating the proper documents protects your interests and ensures you abide by state and federal laws.

Remember that if you are a business owner, you need an Employer Identification Number (EIN) before you can hire anyone. An EIN is also known as a Federal Tax Identification Number and is used to identify your business entity. Once you have an EIN, you can begin the hiring process.

This guide will list and discuss the documents you need to carry you through hiring, onboarding, and managing your employees.


Last updated: March 16, 2022

Table of contents


Documents for hiring employees

Before managing an employee, you must hire them by using the proper documents. Once you have selected a quality applicant for an open position, use the following two documents to offer them the job and outline the employment terms that you are proposing.

Employment Offer Letter

Once you have decided to hire an applicant, you may use an Employment Offer Letter to offer them the job formally. An Employment Offer Letter contains only the most important details of the position you are offering to the applicant, such as:

  • Job title
  • Work location
  • Wage or salary
  • Payment frequency

Our offer letter template also gives you the option to outline other details, including specific work hours and the length of a probationary period.

You can make the offer conditional on the employee completing a certain step, such as signing a contract. Also, you may require an employee to sign and return the letter.

Employment Contract

An Employment Contract is a detailed legal agreement between you and your employee that describes the terms and conditions of their employment. The contract should outline their responsibilities and your obligations to them. Having a written contract helps:

  • Keep employees accountable
  • Establish your expectations of the employee
  • Ensure that you fulfill your obligations

Both you and your employee sign the contract to become bound to its terms. Because Employment Contracts are more detailed than offer letters, they should include details regarding:

  • Compensation
  • Vacation time
  • Work hours and location
  • Job responsibilities
  • Probationary period
  • Termination terms

If necessary, an Employment Contract may also include confidentiality, non-solicitation, or non-competition clauses.


Documents for new employees

Once you have hired a new employee and signed an Employment Contract with them, you can begin the onboarding process.

A major part of onboarding is completing documents that verify the employee's eligibility to work and determine how much tax should be withheld from their pay. Depending on your state, you may not have to create every one of the following documents.

Federal Employee Withholding Certificate (Form W-4)

When you hire new employees, they must fill out Form-W4 to help you calculate the amount of federal income tax that should be deducted from their paychecks. Form-W4 is also known as an Employee Withholding Certificate.

It is essential that employees complete Form W-4 correctly because it prevents them from overpaying in taxes or underpaying and owing a large balance during tax season.

To ensure proper taxation, an employee must specify their marital filing status. A single filing status has very different tax repercussions than being married and filing jointly. To further ensure proper taxation on their W4, employees can also account for:

  • Incomes from multiple jobs
  • Amount of other income
  • Amount of deductions
  • Additional amounts to withhold from each paycheck

The IRS requires all employees to fill out this form. As an employer, it is your responsibility to ensure the completion of this form every time someone new starts working for you. Employees may have to complete a new W-4 Form if their personal or financial situation changes.

According to the IRS's recordkeeping requirements, you must keep W-4 forms for at least four years in case of an IRS audit.

If an employee is having difficulty filling out Form W-4 or is unsure of their deductions, suggest that they try using the IRS's Tax Withholding Estimator or H&R Block's W-4 calculator for guidance.

Employment Eligibility Verification (Form I-9)

Form I-9 verifies an employee's identity and eligibility to work in the United States. Employers and their employees both contribute to this form's completion. You must ensure the completion of Form I-9 for every employee you hire, including citizens and noncitizens.

While completing this document, an employee presents certain documents that attest to their ability to work within the United States. You can find the full list of acceptable documents on the last page of Form I-9.

Depending on the type of documents, an employee either has to present one or two pieces of documentation. For example, a passport can establish both identity and employment authorization. On the other hand, a driver's license only establishes identity, so an employee needs another document to prove their employment authorization, such as a Social Security card.

To complete this form, record the document information on the Form I-9. You must retain a Form I-9 for each person you hire for three years after the hire date or one year after the date employment ends, whichever is later.

State employee withholding form

State employee withholding forms calculate the amount of state income tax that should be deducted from an employee's paychecks. Not all states require employees to fill out state employee withholding forms.

Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming do not require state-level withholding forms because they have no state income tax.

The following states collect state income tax and therefore require new employees to complete a withholding form:

For further information regarding your state's tax withholding documents, visit your state's revenue department.

Direct deposit form

A direct deposit form authorizes an employer to send money directly to an employee's bank account instead of paying them with paycheques.

Direct deposit is a safe and convenient method for delivering payment to staff, mainly because they don't need to accept or manually deposit funds into their accounts. Direct deposit is the most popular payment method because it reduces paperwork for all parties.

To fill out a direct deposit, an employee will need to provide the following information:

  • Bank account number: The identifying number for the account that the employee uses for deposits and withdrawals.
  • Routing number or ABA: A nine-digit code that identifies banks in the U.S.
  • Type of account: Employees can specify whether they want their pay deposited into a checking or savings account.
  • Bank's address
  • The name listed on the bank account

To set up direct deposit, an employee may also submit a voided check which allows you to verify the above information.

Besides the convenience of direct deposit, it is also a very secure payment method. When payment is delivered electronically, it eliminates the possibility of someone stealing or altering an employee's paycheck.

Employee Privacy Policy

An Employee Privacy Policy is a document that outlines an employee's privacy rights while in the workplace. The policy should outline your procedures and practices regarding collecting, storing, and disclosing your employees' personal information.

An employee's personal information may include their:

  • Legal name
  • Home address
  • Phone number
  • Email address
  • Social Security Number
  • Age
  • Gender
  • Salary
  • Education
  • Medical history
  • Employment history
  • Credit history

Generally, an Employee Privacy Policy is a company-wide document that applies to all employees instead of an individualized document for each employee. To complete your Employee Privacy Policy you will need to outline the following information:

  • Your business' name and address
  • The information you may collect from your employees
  • Details about how you will store information

Documents for managing employees

Once you have onboarded an employee and they begin working for you, you will need to use different types of paperwork to help you manage them. By utilizing the proper types of paperwork, you can protect yourself as an employer and stay organized.

Employee Evaluation

An Employee Evaluation is a tool you use to measure an employee's work performance. As an employer, evaluations are vital to your success. You can acknowledge quality performance to ensure it continues and bring attention to areas that need improvement.

Employee Evaluations do not need to be overly formal or complicated. Our template allows you to evaluate your employees in the following areas:

  • Communication
  • Motivation
  • Interpersonal skills
  • Leadership
  • Knowledge and practical skills
  • Adaptability
  • Decision-making
  • Career development
  • Management

To improve future job performance in any of these areas, you have to provide feedback and establish expectations regularly. Evaluations are a great medium to give praise and communicate feedback to your employees.

Our template allows you to evaluate with or without numerical ratings and includes an option for an improvement plan.

Compensation Agreement

A Compensation Agreement allows you to record a change in an employee's pay. You can use a Compensation Agreement to record the change instead of amending or creating a new Employment Contract.

It's very common for employers to increase an employee's pay after they complete their probationary period. Alternatively, you may want to give an employee a raise to reward quality work or time served.

Either way, a Compensation Agreement is a convenient way to inform an employee of the change in their pay and create a written record of the change for your records.

Keep in mind, when setting an employee's compensation, ensure that you pay them at least the minimum wage in your state.

Employee Warning Letter

An Employee Warning Letter is a form that you give to an employee to inform them of an infraction or breach in company protocol.

Using Employee Warning Letters is an integral part of managing staff because having written records can protect you as an employer. Our template provides a place for an employee to sign their warning letter so if there is a dispute, you can prove that they were made aware of their infractions.

If you have to fire an employee for consistent infractions and they claim that they were not given fair warning, having a signed record of an Employee Warning Letter can prove that you gave them sufficient notice to address the issue.

Employment Termination Letter

Unfortunately, terminating employees is sometimes a part of managing staff. An Employment Termination Letter allows you to communicate and create a record of termination. You may provide this letter to an employee as a formal notice of dismissal from their current position with your company. You may use our template for terminations with or without cause.

Besides clearly stating an employee's termination date, an Employment Termination Letter should describe the reason for the employee's dismissal, such as:

  • Misconduct
  • Incompetence
  • Insubordination
  • Absenteeism
  • Stealing
  • Falsifying company records
  • Damaging company property

A termination letter should also specify when any benefits will end, such as health benefits, and if the employee will receive severance. The letter may also be a convenient medium to remind an employee to return any company property they may have in their possession.


Stay on top of employee documents

The paper trail that can result from employing people can be overwhelming. That is why you must keep employee documents organized. In addition, be sure to keep employee payroll records for at least three years. You may have to keep other documents for longer, such as Form-W4. Once three years have passed, be sure to clean out your records and properly dispose of past employee files.

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