How to Hire Your First Employee: Step by Step

Before the offer: set up as an employer

Most of the work of a first hire happens before the person starts. Do these in order, because later steps ask for numbers you get from earlier ones.

Get an EIN. Hiring employees is one of the main reasons the IRS lists for needing one. It is free: the IRS warns that you never have to pay a fee for an EIN, and the online application issues the number right away if it is approved. Your EIN goes on new-hire reports, payroll tax filings and Forms W-2.
Register with your state. Each state runs its own unemployment insurance program, and in most states it is paid for by a tax on employers. Registration triggers differ: in Florida, for example, you become liable once you pay $1,500 or more in wages in a calendar quarter or have an employee on any day in 20 weeks of a year, and you register by the end of the month after that quarter. If your state taxes wages, you also register to withhold state income tax.
Set up workers' compensation. Workers' comp is run state by state, and the rules on who must carry it differ. Texas, for example, lets most private employers choose whether to carry it, but employers without coverage must tell the state. See workers' compensation requirements.
Confirm the person is an employee, not a contractor. The tests are about control and independence, not the title on the contract. See contractor or employee.
Write down the basics you will put in the offer: pay rate, pay schedule, whether the role is exempt or non-exempt from overtime, and the start date. If your state requires a pay range in job posts, it belongs in the post too. See pay ranges in job posts.

The paperwork on day one

Federal new-hire forms and their deadlines
Form	Who fills it in	Deadline
Form I-9, Section 1	The employee	No later than the first day of employment. It can be done earlier, once the person has accepted the offer.
Form I-9, Section 2	You (or someone you authorize) after examining the original documents	Within three business days of the first day of work. If they start Monday, finish by Thursday. If the job lasts less than three business days, finish it on day one.
Form W-4	The employee	Ask for a signed W-4 when they start work. If you do not get one, withhold federal income tax as if they are single.
State withholding form	The employee	Some states use their own form. California, for example, uses Form DE 4 for state income tax withholding.

Collect the employee's legal name and Social Security number for Form W-2. The IRS notes that an Individual Taxpayer Identification Number (ITIN) is not a substitute for a Social Security number for employment. For the full I-9 process, including which documents are acceptable, see Form I-9 and E-Verify.

Report the hire to your state

Federal law requires employers to report new and rehired employees to the state where they work within 20 days of hire, and some states require it sooner. The date of hire is the first day the person performs services for pay. Child support agencies use these reports to find parents who owe support, which is why the rule applies to every employer.

The seven federal data elements: the employee's name, address, Social Security number and date of hire, and your business name, address and EIN.
Some states ask for more fields, so use your state's new-hire reporting website.
If you later have employees in more than one state, you can register with the federal Department of Health and Human Services as a multistate employer and report everyone to one state.

More detail, including how states differ, is in new-hire reporting.

Put up the required notices

Federal law requires certain workplace posters, and which ones apply depends on your size and industry. The Department of Labor's posters page lists, among others, the Fair Labor Standards Act (FLSA) minimum wage poster, the Employee Polygraph Protection Act poster and, for covered employers, the Family and Medical Leave Act (FMLA) poster. Its free elaws Poster Advisor tells you which apply to you. Employers covered by federal anti-discrimination laws also post the Equal Employment Opportunity Commission (EEOC) "Know Your Rights" notice.

If your first hire works remotely, the EEOC says electronic posting may be the only posting for employees who telework and do not visit your workplace regularly. States have their own posters on top of the federal ones. See labor law posters.

Set up payroll before the first payday

Withhold federal income tax from wages, based on the W-4.
Withhold Social Security and Medicare taxes from wages and pay the employer share.
Pay federal unemployment (FUTA) tax from your own funds. Employees do not pay it.
Withhold and pay state taxes where they apply, and pay state unemployment tax.
Pick a pay schedule and check your state's rules on how often employees must be paid.

A step-by-step walkthrough is in how to run payroll for your first employee.

Keep the right records

Federal record retention for a new employee
Record	How long to keep it
Form I-9	Three years after the date of hire or one year after employment ends, whichever is later. You must be able to produce it within three business days if inspectors ask.
Payroll records (FLSA)	At least three years.
Time cards, wage rate tables and work schedules (FLSA)	Two years.
Applications and other hiring records (EEOC)	One year from when the record was made or the personnel action was taken, whichever is later.

States often require longer. See how long to keep employee records. The rest of the first week, from logins to the first-week plan, is in the new-hire onboarding checklist.

Common questions

Do I need an EIN before I hire someone?

Yes in practice. The IRS lists hiring employees as a reason to get an EIN, and the federal new-hire report and payroll tax filings ask for it. It is free from the IRS.

Can the Form I-9 be completed before the first day?

Yes. Once the person has accepted the offer, they can complete Section 1 and you can complete Section 2 at any point up to three business days after their start date.

What if my new employee never returns a Form W-4?

The IRS says to withhold federal income tax as if the employee is single until they give you a W-4.

When does the 20-day new-hire reporting clock start?

From the date of hire, which federal guidance defines as the first day the employee performs services for pay. Check your state, because some require the report sooner.

How MambaHR handles this

When you hire, MambaHR sends the new-hire forms and follows up until they are done, starts the Form I-9, requests logins and a laptop from IT, and sets the first-week plan. The hire also becomes a payroll change, either as a change file for your current payroll provider or sent to Deel-managed payroll (Powered by Deel), and a person approves every payroll run.

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Sources

Last reviewed October 2, 2026. This page is general information, not legal advice. Laws change and exceptions apply, so check the sources above or an employment lawyer before you act on a specific case.