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Ready to Hire Your First Employee? Start Here.

Hiring your first employee is a major milestone—and if you’re feeling overwhelmed, you’re not alone. Whether you’re a growing startup or a small business taking the next step, the process of hiring comes with important legal, financial, and operational responsibilities. Missing a step here could cost you big down the road.

This guide breaks down the steps to hiring your first employee so you can feel confident and compliant from day one. Plus, we’ve included a free hiring checklist to help you cover all your bases.

1. Define the Role Before You Post It

Before you write a job description or open up applications, get clear on:

  • What tasks you want to delegate

  • What skills or expertise you’re missing

  • Whether you need full-time, part-time, or contract help—contact HR Nerd if you need help defining the difference between 1099 or W-2.

This clarity will help you attract qualified candidates and avoid hiring the wrong person.

2. Take Care of the Legal Requirements

Here’s what you legally need to do before your first hire:

✅ Get an Employer Identification Number (EIN) from the IRS
✅ Register with your state’s labor and tax departments
✅ Set up workers’ compensation insurance (requirements vary by state)
✅ Follow federal and state employment laws for pay, breaks, and discrimination

All of this is included in our downloadable checklist.

3. Set Up a Compliant Payroll System

Even for one W-2 employee, payroll must be done correctly. This means:

  • Withholding federal, state, and local taxes

  • Paying the employer portion of Social Security and Medicare

  • Filing quarterly tax reports

You can use payroll software (like Gusto, Rippling, or QuickBooks), or outsource to a provider.

Also, be sure to collect:

  • A W-4 Form (federal tax withholding)

  • An I-9 Form (employment eligibility verification)

4. Prepare for Onboarding and Day One

Hiring isn’t just about paperwork. It’s also about setting the tone for your team. Think about:

  • What systems or tools your new hire will need access to

  • How you’ll train them during their first week

  • How you’ll introduce them to your company values and expectations

This is the beginning of your company culture. Start strong.

5. Download the Free Hiring Checklist

We’ve created a comprehensive, easy-to-follow checklist that walks you through each step of the hiring process—from getting your EIN to onboarding your new hire. Make your first employees experience a great one!

📋 Click here to download the checklist

❓ FAQs About Hiring Your First Employee

Q: What’s the first step to hiring someone?
A: Start by defining the role and confirming that you’re financially ready to add someone to payroll. Then get an EIN and register with your state’s withholding and labor agencies.

Q: Should I classify my new hire as a W-2 employee or 1099 contractor?
A: It depends on the level of control. If you control when, where, and how they work, they are most likely a W-2 employee. Misclassification can result in penalties.

Q: What payroll taxes am I responsible for?
A: Employers must withhold and/or pay:

  • Federal income tax (withheld from employee).

  • Social Security and Medicare (employer pays 7.65% + employee pays 7.65%).

  • Federal unemployment tax (FUTA is 6% of the first $7,000 of each employees income).

  • State income tax and unemployment tax (where applicable with rates changing annually).

Q: What paperwork is required when hiring an employee?
A: At minimum, you’ll need to complete a W-4 and I-9 form, e-verify, report the new hire to your state (most payroll companies handle this for you), and keep proper records for payroll taxes.

Q: Do I need workers’ compensation insurance for one employee?
A: In most states, yes—even if you only have one employee. Check with your state’s department of labor for specific rules.

Q: Do I need an employee handbook or job description?
A: Not legally required, but strongly recommended. A job description clarifies expectations and protects you if termination becomes necessary. A handbook outlines policies, time off, and workplace rules to keep things consistent.

Need Help Setting It All Up?

At HR Nerd, we specialize in helping growing businesses build strong HR foundations—especially when it’s time to hire your first employee.

👉 Contact us for a free consultation and let’s make sure your first hire is a great one.