Hiring Your First Employee: Checklist and Best Free Resources

To hire your first employee, confirm the job is really employment, get a free EIN from the IRS, register with your state's tax and unemployment agencies, arrange workers' comp if your state requires it, and set up payroll. Around day one, you complete Form I-9, collect a Form W-4, and report the hire to your state. Three steps run on a clock: I-9 Section 2 is due within 3 business days of the first day of paid work, the new hire report within 20 days or sooner, and some states want you registered within 10 to 15 days of becoming liable. Every step below links to a free, official source.

What do I need to do, and in what order?

Eleven steps, grouped by when each is due.

Before you make the offer

1. Confirm the job is an employee, not a contractor. The IRS looks at behavioral control, financial control, and the type of relationship, and the label you use does not matter: "If you have an employer-employee relationship, it makes no difference how it is labeled". No single factor decides it, but setting the hours and directing how the work is done points to an employee. See how to tell an employee from an independent contractor.

2. Get an EIN. Apply online with the IRS; it is free, and an approved application gets its number immediately. If your business already has one, use it. If you report a federal tax obligation on the EIN application, you are pre-enrolled in EFTPS, a free system for making the electronic payroll tax deposits the IRS requires, and get a PIN by mail to activate it. More in do I need an EIN.

3. Register with your state. Most states want you registered for income tax withholding and state unemployment insurance (SUI), and the deadlines are short. California wants you registered with the EDD within 15 days once you pay more than $100 in wages in a calendar quarter. Texas wants you registered with the TWC within 10 days of becoming liable. Find your agencies through the IRS state government websites list and see registering for state payroll taxes.

4. Sort out workers' comp. It is state law, and the rules for one employee differ widely:

Look up your state in the DOL directory of state workers' comp officials and read do I need workers' comp for one employee.

5. Put the offer in writing, and check for a state pay notice. Some states require a written pay notice at hire. California's Labor Code 2810.5 requires one at the time of hire, and New York requires one "at time of commitment to hire" (Form LS 54 for hourly workers). Your state labor office can tell you whether yours does. See what to put in an offer letter.

On day one

6. Complete Form I-9. You need one for every person you hire, citizens included. The employee completes Section 1 by their first day, and you complete Section 2 within 3 business days of their first day of paid work. E-Verify is voluntary except for federal contractors with the FAR clause and employers in states that require it. See Form I-9 and E-Verify for small employers.

7. Collect Form W-4 (and your state's version). Ask for a signed 2026 Form W-4 when they start and use it from the first paycheck. If they never hand one in, withhold as Single or Married filing separately with no other entries. Record their name and SSN as shown on their Social Security card for the W-2. California also requires the DE 4. See Form W-4 for employers.

8. Put up the required posters. Federal posters are free from the DOL, and the Poster Advisor tells you which you need. The FLSA minimum wage poster applies to every employer with FLSA-covered employees, the OSHA poster to most private employers, and the FMLA poster only from 50 employees. State posters come from your state labor department. Employers covered by federal anti-discrimination law must also display the EEOC "Know Your Rights" poster; the EEOC's small business page shows which laws apply at your size.

In the first few weeks

9. Report the new hire to your state. Federal law requires you to report new and rehired employees to the state where they work within 20 days, and some states want it sooner: Alabama allows 7 days. You report to the state, not the IRS. Find your state's portal in the OCSE state new hire reporting directory and see new hire reporting.

Before the first payday

10. Set up payroll and budget for employer taxes. State law, not federal law, sets how often you must pay; California requires at least twice a month, with some exceptions. Each payday you withhold federal income tax and the employee's Social Security and Medicare, then pay a matching share of Social Security and Medicare yourself. As a new employer you are a monthly depositor for your first calendar year: one month's taxes are due by the 15th of the next month, and you file Form 941 quarterly. Payroll tax deadlines for 2026 lists every date.

CheckMate calculates federal and state withholding and employer taxes, pays your employee by direct deposit, and charges only when you run payroll, with no monthly fee. You still make the deposits yourself.

From then on

11. Keep the records. Three clocks apply. The IRS wants employment tax records kept at least 4 years. The FLSA requires payroll records for 3 years and timecards for 2. The I-9 stays for 3 years after hire or 1 year after employment ends, whichever is later.

When is each deadline? A sample timeline

Suppose your employee's first day of paid work is Monday, October 5, 2026.

What does one employee cost in federal payroll taxes?

For 2026, you pay 7.65% of wages in Social Security and Medicare plus a small federal unemployment tax, on top of the wage itself.

Take an employee paid $20 an hour for 30 hours a week, paid every two weeks:

• Gross pay per paycheck: $20 × 30 × 2 = $1,200. Per year: $1,200 × 26 = $31,200.
• Withheld from their check: Social Security $1,200 × 6.2% = $74.40, Medicare $1,200 × 1.45% = $17.40, for $91.80 (plus federal income tax, which depends on their W-4).
• Your match: the same $91.80 per paycheck, or $31,200 × 7.65% = $2,386.80 a year. The 2026 Social Security rate is 6.2% each on wages up to $184,500 and Medicare 1.45% each with no cap.
• Federal unemployment (FUTA): 0.6% on the first $7,000 of wages, assuming the full state credit, is $42.00 a year (the 6.0% FUTA rate minus the 5.4% credit). That is $7.20 on each of the first five paychecks and $6.00 on the sixth, which covers the last $1,000 of the wage base.

Federal total on top of wages: $2,428.80 a year. State unemployment and workers' comp come on top, and both vary by state, industry, and claims history.

What are the best free resources for first-time employers?

Government agencies and the SBA-funded SCORE and SBDC advisor networks. None of these sells payroll software.

Start here

• SBA: Hire and manage employees — the government's own plain-language step list; read it first.
• DOL FirstStep Employment Law Advisor — answer a few questions to see which federal labor laws apply to you and what records and posters they require.
• SCORE mentoring — free one-on-one mentoring, virtual or in person.
• America's SBDC locator — find your local Small Business Development Center for no-cost consulting.
• SCORE templates — the free 12-month cash flow statement template shows whether payroll fits your cash.

Federal taxes and forms

• IRS: Get an EIN — the only place you should get one; free.
• IRS Publication 15 (Circular E) — the reference for withholding, deposits, Form 941, and FUTA; bookmark it.
• IRS Publication 15-A — employee vs. contractor detail; read it before paying anyone on a 1099.
• IRS Form W-4 — the current form, with a link to the IRS Tax Withholding Estimator for your employee.

Form I-9 and work authorization

• USCIS I-9 Central — completing and storing the I-9, acceptable documents, and the M-274 employer handbook.
• E-Verify — free online work-authorization check; voluntary for most employers.

Labor law and records

• DOL Poster Advisor — which federal DOL posters you must display, with free copies to print.
• DOL Fact Sheet 21: FLSA recordkeeping — which time and pay records to keep, and for how long.
• EEOC small business requirements — which anti-discrimination laws apply at 1, 15, and 20 employees.

Your state

• IRS state government websites — every state's site, your starting point for registration.
• OCSE state new hire reporting websites — pick your state to reach its new hire portal.
• DOL state workers' comp officials — the agency that says whether you need coverage.
• DOL state labor offices — every state labor department, for state posters, pay notices, and wage rules.

What to do next

1. Check the job against the IRS employee vs. contractor test.
2. Get your EIN and activate EFTPS when the PIN arrives.
3. Register with your state through the IRS state directory and confirm your workers' comp rule.
4. Print a blank I-9 and a W-4 (plus your state form) for day one, and bookmark your state new hire portal.
5. Put your first deposit and Form 941 dates on the calendar. CheckMate emails reminders before each pay date and quarterly 941 deadline, with guidance on what to remit; see how it works.

FAQ

Do I need an EIN if I'm a sole proprietor hiring one person? Yes. Employers need an EIN to report employment taxes, and you can get one free from the IRS online.

Do I have to report part-time or temporary hires? Yes. New hire reporting covers new and rehired employees, and Alabama explicitly includes temporary, seasonal, and part-time workers.

Do I send the I-9 to the government? No. You keep it on file and produce it within 3 business days if an agency asks to inspect it.

Can I ask my new hire for a driver's license and Social Security card for the I-9? No. The employee chooses which acceptable documents to present, and if they show a List A document you cannot ask for List B or C.

Should I get help from a professional? If you have already paid someone as a contractor and are unsure they were one, talk to a CPA or employment attorney: the employment taxes for a misclassified worker can fall on the business. For the checklist itself, free SBDC and SCORE advisors are a good first stop.

Sources

1. IRS, Independent contractor (self-employed) or employee? — https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-or-employee
2. IRS, Publication 15-A (2026), Employer's Supplemental Tax Guide — https://www.irs.gov/publications/p15a
3. IRS, Get an employer identification number — https://www.irs.gov/businesses/small-businesses-self-employed/get-an-employer-identification-number
4. IRS, Publication 15 (2026), (Circular E) Employer's Tax Guide — https://www.irs.gov/publications/p15
5. California EDD, Step 1: Register as an Employer — https://edd.ca.gov/en/payroll_taxes/step-1-register-as-an-employer
6. Texas Workforce Commission, Determine Whether You Need to Establish an Unemployment Tax Account — https://www.twc.texas.gov/programs/unemployment-tax/determine-tax-account
7. IRS, State government websites — https://www.irs.gov/businesses/small-businesses-self-employed/state-government-websites
8. California DIR, Division of Workers' Compensation: Employer information — https://www.dir.ca.gov/dwc/employer.htm
9. Florida DFS, Workers' compensation coverage requirements — https://www.myfloridacfo.com/division/wc/employer/coverage-requirements
10. Texas Department of Insurance, Employer FAQ — https://www.tdi.texas.gov/wc/employer/employerfaq.html
11. DOL, State Workers' Compensation Officials — https://www.dol.gov/agencies/owcp/wc
12. California DIR, Labor Code 2810.5 notice (Wage Theft Protection Act of 2011) — https://www.dir.ca.gov/dlse/Governor_signs_Wage_Theft_Protection_Act_of_2011.html
13. New York DOL, Notice of Pay Rate — https://dol.ny.gov/notice-pay-rate
14. DOL, State Labor Offices — https://www.dol.gov/agencies/whd/state/contacts
15. USCIS, Completing Form I-9 — https://www.uscis.gov/i-9-central/completing-form-i-9
16. USCIS, Completing Section 1 — https://www.uscis.gov/i-9-central/completing-form-i-9/completing-section-1-employee-information-and-attestation
17. USCIS, Completing Section 2 — https://www.uscis.gov/i-9-central/completing-form-i-9/completing-section-2-employer-review-and-attestation
18. USCIS, M-274 Handbook for Employers, 10.0 Retaining Form I-9 — https://www.uscis.gov/i-9-central/form-i-9-resources/handbook-for-employers-m-274/100-retaining-form-i-9
19. USCIS, Form I-9 — https://www.uscis.gov/i-9
20. E-Verify User Manual, 1.1 Background and Overview — https://www.e-verify.gov/e-verify-user-manual-10-introduction/11-background-and-overview
21. IRS, About Form W-4 — https://www.irs.gov/forms-pubs/about-form-w-4
22. California EDD, Rates and Withholding (DE 4) — https://edd.ca.gov/en/payroll_taxes/rates_and_withholding/
23. DOL, Workplace Posters — https://www.dol.gov/general/topics/posters
24. DOL, elaws Poster Advisor — https://webapps.dol.gov/elaws/posters.htm
25. EEOC, Small Business Requirements — https://www.eeoc.gov/employers/small-business/small-business-requirements
26. HHS ACF, Office of Child Support Services, New Hire Reporting — https://acf.gov/css/employers/employer-responsibilities/new-hire-reporting
27. Alabama Department of Workforce, New Hires — https://workforce.alabama.gov/employers/new-hires/
28. HHS ACF, State New Hire Reporting Websites — https://acf.gov/css/contact-information/state-new-hire-reporting-websites
29. DOL, State Payday Requirements (summary table dated January 1, 2023) — https://www.dol.gov/agencies/whd/state/payday
30. IRS, Employment tax recordkeeping — https://www.irs.gov/businesses/small-businesses-self-employed/employment-tax-recordkeeping
31. DOL, Fact Sheet #21: Recordkeeping Requirements under the FLSA — https://www.dol.gov/agencies/whd/fact-sheets/21-flsa-recordkeeping
32. SBA, Hire and manage employees — https://www.sba.gov/counseling/manage-your-business/#hire-and-manage
33. DOL, FirstStep Employment Law Advisor — https://webapps.dol.gov/elaws/firststep/
34. SCORE, How mentoring works — https://www.score.org/how-mentoring-works/
35. America's SBDC, Find your SBDC — https://americassbdc.org/find-your-sbdc/
36. SCORE, Templates — https://www.score.org/templates/
37. USCIS, I-9 Central — https://www.uscis.gov/i-9-central
38. E-Verify — https://www.e-verify.gov/