How to hire your first employee: the steps, forms and deadlines

What are the steps to hire a first employee?

These are the federal steps. Your state adds its own, listed in the table further down. Running the business under your own name? See whether a sole proprietor can have employees.

1. Get an Employer Identification Number (EIN)

   Free

   An Employer Identification Number (EIN) is the tax ID number the IRS gives a business, and the IRS says you need one if you have employees. Its online application is free, and the number is issued as soon as the application is approved. The IRS warns against websites that charge for an EIN, because you never have to pay for one. If you’re setting up an LLC or a corporation, the IRS says to form it with your state first and then apply.

   Apply for an EIN at IRS.gov

2. Register for your state’s payroll taxes

   States collect their own payroll taxes, and each has its own sign-up. The Small Business Administration (SBA) lists this in its payroll steps as finding out whether you need state or local tax IDs. It adds that unemployment insurance varies by state and may mean registering with your state’s workforce agency. The IRS links to every state’s site for employers, and the Department of Labor lists each state’s unemployment tax office.

   Every state’s site, from the IRS · State unemployment tax offices, from the Department of Labor

3. Have the employee fill out Form W-4

   When they start work

   Form W-4 tells you how much federal income tax to withhold from the employee’s pay. The IRS says to ask every new employee for a signed one when they start work and to use it from the first wage payment. If an employee doesn’t give you one, the IRS says to withhold as if the employee is single. You also need the employee’s name and Social Security number, which go on the Form W-2 at the end of the year.

   Hiring employees, from the IRS

4. Complete Form I-9

   Within 3 business days of the first day of work

   Form I-9 is how an employer verifies that a new hire is who they say they are and is allowed to work in the United States. The IRS says every U.S. employer must complete one for every person hired, citizens and noncitizens alike. The employee fills in Section 1 no later than the first day of work for pay. You, or someone you authorize, complete and sign Section 2 within 3 business days of that first day, according to U.S. Citizenship and Immigration Services (USCIS).

   Completing Section 2 of Form I-9, from USCIS

5. Report the new hire to your state

   Within 20 days of hire, or sooner where the state says so

   Federal law requires employers to report each new or rehired employee to the state where the employee works within 20 days of hire, and some states require it sooner. The report has 7 items: the employee’s name, address, Social Security number and date of hire, and the employer’s name, address and federal Employer Identification Number. States pass the reports to a national directory that child support agencies use. The state table on this page gives each state’s deadline and where to send the report.

   New hire reporting, from the Administration for Children and Families

6. Check your state’s workers’ compensation rule

   The SBA lists workers’ compensation among the benefits employers are required to provide, through a commercial insurance carrier, by self-insuring, or through a state workers’ compensation program. What’s required varies by state. The Department of Labor links to every state’s workers’ compensation office.

   State workers’ compensation offices, from the Department of Labor

7. Put up the required workplace posters

   Free from the Department of Labor

   Some federal labor laws require employers to post notices in the workplace, and which ones apply depends on the business. The Department of Labor gives the posters away as free downloads, and its elaws Poster Advisor works out which ones you’re required to display. State posters are separate and come from each state’s labor department.

   The Department of Labor’s Poster Advisor

8. Withhold and deposit payroll taxes from the first paycheck

   Each payday you withhold federal income tax and the employee’s share of Social Security and Medicare, and you owe a matching employer share. The IRS requires the deposits to be made electronically, on a monthly or semiweekly schedule that IRS Publication 15 tells you how to determine before each calendar year. Paying through an IRS business tax account, Direct Pay for businesses or the Electronic Federal Tax Payment System (EFTPS) is free. Federal unemployment tax is the employer’s alone and is never withheld from pay. It’s deposited once the amount due passes $500, by the end of the month after the quarter.

   Depositing and reporting employment taxes, from the IRS

9. File Form 941 each quarter, and Forms W-2 and 940 each January

   April 30, July 31, October 31 and January 31

   Form 941 reports the wages you paid and the income tax, Social Security and Medicare tax on them. The IRS wants it by the last day of the month after each quarter ends. Once a year, by January 31, you give each employee a Form W-2, file the W-2s with the Social Security Administration, and file Form 940 for federal unemployment tax. A due date that lands on a weekend or legal holiday moves to the next business day.

   Employment tax due dates, from the IRS

What does an employee cost beyond wages?

Social Security, employer share

6.2% of wages up to $184,500 in 2026. Details

Medicare, employer share

1.45% of all wages

Federal unemployment tax

6% of the first $7,000 of each employee’s pay, before a credit most employers get for paying state unemployment tax on time. Details

State unemployment tax

At a rate your state sets

Workers’ compensation insurance

Where your state requires it

State paid leave premium

In states with a program; the state table names them

An example, not an average: for one full-time employee at $20 an hour ($41,600 a year), the employer’s share of Social Security and Medicare is $3,182 a year. The employee pays the same amount through withholding.

Can you run payroll yourself?

Payroll systems that say they file the taxes for you

Listed alphabetically, and only where the company’s own page says it files payroll taxes. List prices before discounts and add-ons; the one-employee figure is our arithmetic. We may earn a commission from these links; it never decides who’s listed. How we make money.

Compare the systems’ prices and state coverage side by side

What does your state add?

Every state has its own new hire reporting address and deadline, and 31 of the 51 listed here set a minimum wage above the federal one. 13 state paid leave programs and 15 state retirement mandates are in effect, and where one applies it runs through payroll. Each state’s page has the rest: paydays, final paychecks, breaks and overtime.

New hire deadlines and addresses are from each state’s own new hire site, read on the date shown on that state’s page.

Questions employers ask