Understanding Form I-9: Employment Eligibility for Small Business

As a small business owner, hiring your first employee is an exciting milestone. But it also comes with important compliance responsibilities. One of the most critical is completing Form I-9, the federal form used to verify an employee's identity and authorization to work in the United States.

At Basswood, we specialize in payroll processing and financial compliance. While we don't provide HR or legal advice, we want to help you understand your obligations and point you to the right resources to keep your business in good standing with governing agencies.

What is Form I-9?

Form I-9, officially titled Employment Eligibility Verification, is required by the U.S. Citizenship and Immigration Services (USCIS). It must be completed for every employee hired after November 6, 1986, regardless of citizenship or immigration status.

Who Fills it Out?

The form is broken into multiple sections, and requires participation of the employee and the employer.

• Section 1 is completed by the employee on or before their first day of work.

• Section 2 is completed by the employer within three business days of the employee's start date.

• Supplement A or B is used when a preparer/translator assists with the hiring process or when reverification is needed.

What Documents Are Required?

Employees must present original documents from the USCIS-approved list (List A, or a combination of List B and List C). Employers must examine these documents in person (or via authorized remote procedures) and determine if they appear legit and related to the employee.

You can find the full list of acceptable documents here on the USCIS website.

How Long Should You Keep Forms I-9?

Employers must retain Forms I-9 for three years after the date of hire or one year after the date employment ends, whichever is later. These forms must be available for inspection by authorized government officials, so it's best to keep them in a dedicated file, separate from the employee's personnel file.

Common Mistakes to Avoid

Because Form I-9 is unrelated to pay or tax withholdings, many small business owners overlook these requirements, opening the business to potential risk. It is the employer's responsibility to meet these requirements and validate the employee's eligibility to work.

1. Missing deadlines for completion

2. Accepting expired documents

3. Storing Forms I-9 in the employee's personnel file

4. Failing to reverify work authorization when required

Best Practices

When it comes to protecting your small business from costly penalties and operational disruptions, it's best to stay informed and maintain organized records.

• Use the USCIS I-9 Central for up-to-date guidance

• Conduct periodic internal audits of your employment records

• Train staff responsible for hiring and onboarding to ensure compliance

How We Can Help

At Basswood, our focus is helping small business owners achieve their goals with clarity and confidence through financial organization and compliance management. While we do not complete Forms I-9, our payroll services can help you stay compliant with income reporting, tax withholding, and employee onboarding procedures. We also offer tools to help track employment dates and document retention schedules.