Hiring your first employee is a milestone. It is also the moment your business becomes an employer in the eyes of the IRS, your state tax agency, your state labor department and US Citizenship and Immigration Services. Overnight you have new registrations to complete, new forms to collect, new taxes to withhold and new posters to hang. None of it is hard, but much of it has deadlines, and skipping a step can mean penalties.
Use this checklist to work through everything in order, before and after your first hire's start date.
Before you make an offer
1. Confirm this is really an employee
Before anything else, make sure the role is employment and not an independent contractor arrangement. If you control how, when and where the work is done, provide the tools, and the work is central to your business, the person is likely an employee. Federal agencies and states use different tests, and some states (such as California) apply a strict test that makes contractor status harder to justify. Misclassification can lead to back taxes, unpaid overtime and penalties.
2. Get an Employer Identification Number (EIN)
If you do not already have one, apply for an EIN from the IRS. It is free and can be done online. You will use it on payroll tax filings, W-2s and state registrations.
3. Register with your state
Most states require you to register for:
- State income tax withholding (in states with an income tax)
- State unemployment insurance (SUI) through your state workforce or labor agency
- Any local payroll taxes or state disability or paid family leave programs that apply
If your employee works remotely in a different state, you typically need to register in the state where they work.
4. Set up workers' compensation insurance
Nearly every state requires employers to carry workers' compensation insurance, though thresholds and rules vary. Texas is a notable exception, where coverage is generally optional for private employers. Some states run their own state funds. Have coverage in place before the employee starts.
5. Decide on pay, classification and policies
- Set the wage and confirm it meets federal, state and local minimum wage
- Decide whether the role is exempt or non-exempt from overtime
- Choose a pay schedule that satisfies your state's pay frequency rules
- Decide on paid time off and check whether your state or city requires paid sick leave
- Write a clear job description; the AskHrAI job description generator can help
If your state has a pay transparency law, you may need to include a pay range in the job posting.
6. Set up payroll
Payroll software or a payroll provider will calculate withholding, file payroll tax returns and handle W-2s. Even with one employee, doing payroll by hand is risky. You will be responsible for withholding federal income tax and the employee's share of Social Security and Medicare, paying the employer share of those taxes, and paying federal (FUTA) and state unemployment taxes.
On or before day one
7. Complete Form I-9
Every new employee in the US must complete Form I-9 to verify identity and employment authorization. The employee completes Section 1 no later than the first day of work. You must examine their documents and complete Section 2 within three business days of the start date. Do not tell the employee which acceptable documents to present. Keep I-9s separate from personnel files and retain them for the required period.
E-Verify is voluntary for most private employers under federal law, but some states require it for some or all employers.
8. Collect Form W-4 and state withholding forms
Have the employee complete the federal Form W-4 so you know how much federal income tax to withhold. Many states have their own withholding certificate as well.
9. Report the new hire
Federal law requires employers to report new hires to their state's new hire registry within 20 days of the hire date. Some states set a shorter deadline. Reporting supports child support enforcement and helps prevent unemployment fraud.
10. Display required posters
Federal law requires certain workplace notices, such as the FLSA minimum wage poster, the OSHA job safety poster and the Employee Polygraph Protection Act notice. Others apply only once you reach certain thresholds: the "Know Your Rights" equal employment opportunity poster at 15 employees, and the FMLA notice at 50. States add their own required notices. For remote employees, provide notices electronically.
11. Deliver state-required notices and the offer letter
Some states require a written notice at hire listing pay rate, pay day and employer information, or notices about sick leave, workers' compensation or unemployment insurance. Your offer letter should cover start date, pay, classification, at-will status (where applicable) and any contingencies. You can generate one with AskHrAI HR documents.
Your first-hire checklist at a glance
| Task | Timing | Where |
|---|---|---|
| Confirm employee vs. contractor status | Before offer | Internal review |
| Obtain EIN | Before first payroll | IRS |
| Register for state withholding and unemployment insurance | Before first payroll | State tax and labor agencies |
| Buy workers' compensation coverage | Before start date | Insurer or state fund |
| Set up payroll | Before first payroll | Payroll provider |
| Form I-9 Section 1 | By first day of work | Employee |
| Form I-9 Section 2 | Within 3 business days of start | Employer |
| Form W-4 and state withholding form | First day | Employee |
| New hire report | Within 20 days (shorter in some states) | State new hire registry |
| Federal and state posters | Before start date | Workplace or electronic |
| State hire notices and offer letter | At or before hire | Employee |
After the first day
- Onboard properly. A structured first week helps new hires get productive faster. The AskHrAI onboarding tool can build a plan.
- Keep good records. Maintain payroll records, time records for non-exempt employees and personnel files. The FLSA requires payroll records to be kept for at least three years.
- Start a simple handbook. Even a short set of written policies on pay, time off, conduct and anti-harassment sets expectations early.
- Calendar recurring filings. Quarterly Form 941, annual Form 940, W-2s each January, and state unemployment reports.
- Track headcount thresholds. Many laws switch on as you grow: Title VII and the ADA at 15 employees, the ADEA at 20, COBRA at 20, and FMLA at 50. State laws often kick in sooner.
Key takeaways
- Confirm the worker is truly an employee before you hire.
- Get your EIN, state tax and unemployment registrations, and workers' comp in place before the start date.
- Complete Form I-9 on time (Section 2 within three business days) and collect the W-4.
- Report the hire to your state registry within 20 days, or sooner if your state requires it.
- Post federal and state notices and give any state-required hire notices.
Want a state-specific list for your first hire? Check the AskHrAI compliance checker or look up your state in the HR law guides.
This article is general information, not legal advice. Employment laws change and vary by state and city — confirm details with your state labor department or an employment attorney.