If you’re wondering how to hire your first employee, you need to set up as an employer before the person starts: get an Employer Identification Number (EIN), register with your state, arrange workers’ compensation insurance and a payroll system, and then complete the new-hire paperwork on day one. The rest of how to hire your first employee (defining the role, finding candidates and making an offer) runs alongside that setup. This step-by-step guide shows how to hire your first employee in the right order, so the legal pieces are in place when your new team member walks in.
Step 1: Decide What You Need and What You Can Afford
When you plan how to hire your first employee, start with the work, not the job title. List the tasks taking most of your time, then mark which ones someone else could do well and which ones grow revenue or protect quality. That list becomes the role.
Then build a budget. Wages are only part of the cost. As an employer you also pay your share of payroll taxes, workers’ compensation premiums, any benefits you offer, equipment and software, and the time you spend training. For example, IRS Publication 15 (2025) sets the employer share of Social Security tax at 6.2% and Medicare tax at 1.45% of wages, on top of federal and state unemployment taxes.
Employee or contractor?
Not every first hire needs to be an employee. A contractor can work for a short, defined project. But if you will control how, when and where the work is done, the worker is likely an employee under IRS and Department of Labor tests. Misclassification can lead to back taxes and penalties. Our guide to exempt vs non-exempt employees covers the next decision: whether the role is eligible for overtime.
Step 2: Set Up as an Employer Before You Hire
A key part of how to hire your first employee is doing these tasks before the start date. Some take days or weeks to process.
- Get an EIN. Employers need an Employer Identification Number to report taxes. You can apply for an EIN online with the IRS at no cost.
- Register with your state. Most states require employers to register for state unemployment insurance and, where the state has an income tax, for withholding. Check your state’s labor or revenue agency.
- Get workers’ compensation insurance. The SBA notes that workers’ compensation is required through a commercial carrier, on a self-insured basis or through a state program, depending on state rules.
- Choose a payroll system. Decide whether you will use payroll software, an accountant or a payroll provider, and pick your pay schedule.
- Plan your recordkeeping. Publication 15 says to keep employment tax records for at least 4 years. Set up a secure place for personnel files and a separate place for medical and I-9 records.
- Display required posters. Federal and state laws require certain workplace notices. The SBA points employers to free posters from the U.S. Department of Labor.
The SBA’s guide to hiring and managing employees is a useful federal checklist for this stage.
Step 3: Write the Job Description and Set Pay
As you work out how to hire your first employee, remember that a clear job description saves time on every later step. Include the job title, a short summary, key responsibilities, must-have and nice-to-have qualifications, schedule, location or remote setup and pay range. Our guide to writing a job description that attracts talent walks through each section.
Set pay using local market data for the role, your budget and any minimum wage and overtime rules that apply in your state and city. Check whether a pay transparency law requires you to include a pay range in the job posting.
Step 4: Find and Screen Candidates
When deciding how to hire your first employee, a mix of channels usually works best:
- Your own network, customers and professional contacts
- Job boards and professional networking sites
- Local colleges, trade schools and workforce boards
- Industry associations and community groups
- A recruiter or staffing partner when the role is specialized or urgent
Screen applications against the must-haves you wrote down. A short phone screen confirms interest, availability and pay expectations before you spend time on full interviews.
Step 5: Interview, Check References and Make an Offer
Use the same core questions for every candidate so you can compare answers fairly. Behavior-based questions about past situations tell you more than hypotheticals. A bank of behavioral interview questions gives you examples to adapt.
Avoid questions about age, family plans, religion, disability, national origin or other protected traits. Focus on the job and the candidate’s ability to do it.
Before you make an offer, check at least two references, and run any background checks only with the candidate’s written consent and in line with federal and state rules. Then send a written offer letter with the title, start date, pay, schedule, exempt or non-exempt status, benefits and any contingencies.
Step 6: Complete New-Hire Paperwork
The last legal step in how to hire your first employee is paperwork. On or before the first day, complete these core items:
| Task | What it is | Timing |
|---|---|---|
| Form I-9 | Verifies identity and employment authorization | Employee completes Section 1 by the first day of employment; employer completes Section 2 within three business days after the first day |
| Form W-4 | Employee’s federal income tax withholding certificate | Ask the employee to complete it when hired |
| State withholding form | State income tax withholding, where applicable | At hire, per state rules |
| New hire report | Report the new employee to your state’s new hire registry | Within 20 days of hire under federal law; some states require it sooner |
| Name and SSN | Record the name and SSN exactly as on the Social Security card | At hire |
The timing for Form I-9 comes from the USCIS Form I-9 instructions (edition 01/20/25). New hire reporting rules are summarized by the Office of Child Support Services. Publication 15 adds that many states accept a copy of Form W-4 with employer information added as the new hire report.
Step 7: Onboard and Set Up Your First Employee for Success
A strong first week makes a big difference with a first hire, because there is no team to fill in gaps. Have equipment and accounts ready, walk through expectations and priorities, and schedule regular check-ins for the first 90 days. The new hire onboarding checklist gives a day-by-day plan.
Finally, run your first payroll carefully. Confirm withholding, deposit payroll taxes on schedule and keep copies of everything. If you are unsure about your deposit schedule or filings, ask your accountant or payroll provider before the first pay date.
How to Hire Your First Employee FAQ
What do I need to do to hire my first employee?
Get an EIN, register with your state for unemployment insurance and withholding, buy workers’ compensation coverage, set up payroll, post required notices, then complete Form I-9, Form W-4 and the state new hire report when the person is hired.
How much does it cost to hire your first employee?
More than the wage alone. Add the employer share of Social Security and Medicare taxes, federal and state unemployment taxes, workers’ compensation, benefits, equipment and training time. Build the budget from your own quotes and state rates.
Do I need an LLC to hire an employee?
No. Sole proprietors, partnerships, LLCs and corporations can all hire employees. What every employer needs is an EIN and the federal and state registrations that come with having employees.
Should my first hire be an employee or a contractor?
It depends on how the work is controlled. If you set the schedule, provide the tools and direct how the work is done, the worker is likely an employee. Short, independent projects may suit a contractor.
This article is general information, not legal or tax advice. Check with a qualified professional for your situation.
Get Help Hiring Your First Employee
Figuring out how to hire your first employee takes time you may not have. Bridgecore Partner’s full-time hiring services can help you define the role, find qualified candidates and move to an offer faster. Contact Bridgecore Partner to talk about the hire you need to make.