Hiring Your First Employee

Hiring your first employee is a major step—and if you’ve been running solo or with contractors, you might be wondering where to start. This guide covers the basic things you need to know to hire legally, pay properly, and set up your business for long-term success.

Step 1: Make Sure It’s Really an Employee

If you direct how someone works, set their schedule, and they only work for your business—they’re likely a W-2 employee, not a 1099 contractor. Misclassifying someone can lead to penalties, so when in doubt, treat them as an employee or get professional advice.

Step 2: Register for Payroll & Insurance

Even if your business is already set up, you’ll need to:

• Confirm you have an EIN from the IRS
• Register with your state’s labor and unemployment departments
• Set up workers’ compensation insurance
• Make sure your business insurance covers employees

Step 3: Choose a Payroll Provider

Payroll is more complex than cutting a check. You’re responsible for withholding and paying federal, state, and local taxes—and staying compliant with reporting deadlines.

We recommend Gusto to make payroll easy and stress-free. It handles tax filings, direct deposit, onboarding paperwork, and more.

→ Get started with Gusto here

Step 4: Prepare Your Documents

Before they start, you’ll need to collect:

• A signed offer letter
• Form W-4 (for tax withholding)
• Form I-9 (employment eligibility)
• Direct deposit information
• Any state-required forms

You’ll also want a basic employee policy or handbook to explain expectations and time off.

Step 5: Make Their First Week Count

Even if it’s just you and one employee, take onboarding seriously. Set clear expectations, give them the tools they need, and check in regularly. It’s your chance to build a great foundation from the start.

Want the Checklist in a Printable Format?

Download our free one-page guide:
10 Things You Need to Do Before Hiring Your First Employee

✅ Quick-reference checklist
✅ Clear, step-by-step instructions
✅ Perfect for your desktop or onboarding folder

👉 Click here to download the PDF

Need Help?

If this feels like a lot, you’re not alone. Hiring that first employee can be confusing—but it doesn’t have to be. We help business owners with setup, payroll, and ongoing support so you can focus on running your business.

Reach out if you’d like help getting everything in place—so you can hire confidently and grow with peace of mind.