Do Business Owners Need an I-9: Rules, Forms, and Penalties

Whether business owners need an I-9 for themselves depends entirely on business structure: sole proprietors and general partners do not, because they are not employees of their own businesses, while owners who draw wages from a corporation or an LLC taxed as a corporation do. Separately, every business owner who hires anyone must complete and keep a Form I-9 for each employee.

Whether You Need an I-9 for Yourself

Federal regulations define an employee as someone who provides services or labor to an employer for wages or other compensation.¹ USCIS states the rule directly: if you are self-employed, you do not need to complete Form I-9 on your own behalf unless you are an employee of a separate business entity such as a corporation or partnership.²

By structure:

Sole proprietors. You and the business are the same legal person. No employer-employee relationship exists, so no I-9 is required for yourself.
General partnerships. Partners are co-owners, not employees. No I-9 for the partners themselves.
Corporations (S-Corp or C-Corp). The corporation is a separate legal entity. If you draw a salary from it, the corporation employs you and you need an I-9.
LLCs. It depends on the tax election. A single-member LLC with no employees typically operates like a sole proprietorship, and the member does not need an I-9. If the LLC has elected to be taxed as a corporation and pays you wages through payroll, you are an employee of a separate entity and must complete the form.

The test is whether a separate business entity is paying you wages. If it is, you are that entity’s employee for I-9 purposes regardless of how much of it you own.¹

Which Workers Need an I-9

Every person you hire for employment in the United States needs a completed Form I-9. Full-time, part-time, and temporary workers all count. The requirement has applied to anyone hired after November 6, 1986.³

You do not complete an I-9 for:

Independent contractors who run their own businesses, set their own methods and schedules, supply their own tools, and are accountable only for results.
Workers supplied by a staffing agency. The staffing agency is their employer and handles verification.
Casual domestic workers you hire sporadically for household tasks on an irregular basis.
Workers not physically located in the United States.

These exemptions come from USCIS guidance.⁴ The contractor line matters most in practice, because misclassification is common. If you control when, where, and how someone does the work, that person is likely your employee regardless of what the contract calls them. Skipping I-9 verification by mislabeling employees as contractors can trigger both immigration penalties and back taxes.

Completing the Form for a New Hire

Download the current version from the USCIS website at uscis.gov/i-9-central. Using an outdated edition is treated the same as not having a form at all during an audit.³

Section 1: Employee Information

The employee fills out Section 1 no later than their first day of work, though they can complete it any time after accepting the job offer.⁵ Section 1 collects the employee’s legal name, address, date of birth, and an attestation about citizenship or immigration status. The employee signs under penalty of perjury.⁶

Section 2: Employer Review

You examine original documents the employee presents and record them in Section 2 within three business days of the employee’s first day of work. If the job will last fewer than three business days, Section 2 must be finished by the first day of employment.⁶

Acceptable documents fall into three lists:

List A proves both identity and work authorization with a single document. Examples include a U.S. passport and a Permanent Resident Card.
List B proves identity only. Examples include a state driver’s license or ID card.
List C proves work authorization only. Examples include an unrestricted Social Security card.

An employee can present one List A document, or one List B plus one List C. The employee chooses which documents to show. You record the document title, issuing authority, document number, and expiration date in Section 2.⁶

If a document has been lost, stolen, or damaged, you must accept a receipt showing the employee applied for a replacement. That receipt is valid for 90 days from the date of hire, and before those 90 days expire the employee must present the actual replacement or an acceptable alternative from the same list category.⁷ Receipts cannot be accepted if the job will last fewer than three business days.

Keeping the Forms and Fixing Mistakes

Keep every completed I-9 for three years after the date of hire or one year after employment ends, whichever is later.⁸ A practical shortcut: if someone worked for you less than two years, keep the form three years from their hire date; if longer than two years, keep it one year after they leave.

Store I-9s separately from regular personnel files. Immigration and Customs Enforcement can issue a Notice of Inspection requiring you to produce all I-9s within three business days,⁹ and a dedicated folder or binder lets you hand over the records without exposing unrelated employee information.

Errors do not require starting over, but the correction method matters. Never use correction fluid or erase information. Draw a line through the incorrect entry, write the correct information nearby, and initial and date the change. Attach a brief note explaining why the correction was needed. Only the employee can correct Section 1 errors. Only the employer can correct Section 2 errors. If a form has so many problems that corrections would be illegible, redo the entire section on a new form and attach it to the original with a written explanation. If you forgot to date Section 2 when it was originally completed, enter today’s date rather than backdating it.¹⁰

Verifying Without Discriminating

The I-9 process creates real discrimination risk. Federal law prohibits you from doing any of the following based on a worker’s citizenship, immigration status, or national origin:

Requesting more documents than the form requires.
Rejecting documents that reasonably appear genuine and relate to the employee.
Specifying which particular documents the employee must present.

These rules come from USCIS anti-discrimination guidance.¹¹ In practice, you cannot ask a worker who looks or sounds foreign to show a passport when you accept a driver’s license and Social Security card from everyone else. You cannot insist on a green card when the employee offers a valid List A document. The employee picks.

Applying different scrutiny to different workers is a common route to complaints. In one federal case, a Las Vegas casino settled after the Department of Justice alleged it required non-citizen employees to provide more documents than citizens and subjected those documents to a heightened review process citizens’ documents did not face. The safer approach is treating every employee identically during verification, with no extra steps for anyone.

Penalties for I-9 Violations

Penalties fall into three categories, and the dollar amounts are adjusted upward every year for inflation.

Paperwork violations cover missing forms, incomplete fields, and technical errors. The base statutory range is $100 to $1,000 per form; after annual inflation adjustments the current range is roughly $288 to $2,861 per form.¹² Factors that influence where you land include the size of your business, your good faith, the seriousness of the violation, and your history. A small business with a few honest mistakes on otherwise complete forms is treated differently from one with a stack of blank I-9s.

Unlawful hiring violations apply when you knowingly hire or continue to employ someone without work authorization. The statutory base ranges from $250 to $2,000 per unauthorized worker for a first offense, $2,000 to $5,000 for a second, and $3,000 to $10,000 for a third or subsequent offense. After inflation adjustments, the current first-offense range is approximately $698 to $5,579 per worker.¹²

Criminal penalties apply when there is a pattern or practice of hiring unauthorized workers. Convictions can result in fines up to $3,000 per unauthorized worker and imprisonment of up to six months.¹² That tier is reserved for the most egregious cases, but the range shows why treating I-9 compliance as a paperwork afterthought is a genuine business risk.

1
eCFR. 8 CFR 274a.1 – Definitions
2
U.S. Citizenship and Immigration Services. 2.0 Who Must Complete Form I-9
3
U.S. Citizenship and Immigration Services. 1.0 Why Employers Must Verify Employment Authorization and Identity of New Employees
4
U.S. Citizenship and Immigration Services. Exceptions
5
U.S. Citizenship and Immigration Services. Completing Section 1, Employee Information and Attestation
6
U.S. Citizenship and Immigration Services. Instructions for Form I-9, Employment Eligibility Verification
7
U.S. Citizenship and Immigration Services. 4.4 Acceptable Receipts
8
U.S. Citizenship and Immigration Services. 10.0 Retaining Form I-9
9
U.S. Immigration and Customs Enforcement (ICE). Form I-9 Inspection Under Immigration and Nationality Act 274A
10
U.S. Citizenship and Immigration Services. Correcting Errors or Missing Information on Form I-9
11
U.S. Citizenship and Immigration Services. Preventing Discrimination
12
Office of the Law Revision Counsel. 8 USC 1324a – Unlawful Employment of Aliens