If you’re adding an employee to your business for the first time, you may be a bit unsure of what’s required. Here’s a quick 9-step new hire checklist to help you get started.

If you already have employees, many of these steps will be things you have done. However, if you are looking for further details on what you need for new employee forms, we invite you to check out our longer, more comprehensive article on new employee forms.

If you use payroll software, most of these forms can get completed & filed for you. Our recommended software provider is Gusto. Gusto can not only complete a number of the below steps for you, including worker’s compensation and taxes, it can also store all of your employee(s)’s information in a secure place. Click here to try it free for 30 days.

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The 9 Step New Hire Checklist

Below are the 9 essential things you need to do before you hire your first employee. If you accidentally have already started that new employee, try to at least get these done before your first payroll.

Step 1: Employer Identification Number (EIN)

What It Is: EINs are used by the IRS for tax administration. Before you hire your first employee, you’ll have to apply for an EIN here on the IRS website.

Due: Before your first hire

Step 2: Register for State Taxes

What It Is: If haven’t already, make sure your business is registered for state and local taxes. Your state will likely provide you with an ID or number that you will need later when submitting payroll taxes.

Due: Before your first hire (in most states)

Step 3: Worker’s Comp Insurance

What It Is: Most states require businesses with 1 or more employees (besides owners) to purchase worker’s compensation insurance. This can typically be purchased through the state or through a private carrier. To find your state’s policy and agency, check out this table from the National Federation of Independent Businesses (NFIB). Most payroll software can get you setup with workers comp insurance, including Gusto.

Due: Before your first hire (in many states)

Step 4: Federal W-4 Form

What It Is: Have your employee fill out and sign a Federal W-4 form on or before their first day of work. The W-4 is where an employee specifies their tax withholding preferences. You can find the form here on the IRS website. You do not have to submit this to the IRS, although you are required to keep it on file.

Due: On or before your employee’s first day

Step 5: State W-4 Form

What It Is: This is relevant only to states that collect income tax (such as California, New York and Illinois, but NOT Texas, Florida or Washington.) You can find your state’s W-4 form listed here on the Bureau of Labor Statistic’s website.

Due: On or before your employee’s first day

Step 6: Post Required Notices and Posters

What It Is: Depending on the state you’re located in and your industry, you’ll probably be required to post some notices around the workplace. These are called labor law posters and include things like at will employment, minimum wage rates and anti-discrimination laws. Most federal and state agencies will provide these posters for free (or at least give you PDFs to print out.) The Department of Labor has an interactive questionnaire that will help you figure out which federal poster you needs. You’ll also want to check with your state office for any more required notices.

Due: On or before your employee’s first day

Step 7: Determine State Unemployment Tax Rate

What It Is: Your State Unemployment Insurance (SUI) tax rate often varies from year to year, depending on salaries/wages. You should be given your SUI tax rate each year in the mail, or be able to log into your state tax registration website to find it. New businesses will use a default rate.

Due: Before you run your first payroll

Step 8: Form I-9

What It Is: This verifies an employee’s eligibility to work in the United States. You do not have to submit this to the government, although you do have to keep it on file for 3 years after the date of hire (or 1 year after an employee’s termination, whichever is later.)

Due: Within 3 days of hiring

Step 9: Register with New Hire Reporting Program

What It Is: All businesses need to report their new employees to their state’s New Hire Reporting Program. The purpose of this registry is to help the government enforce child support payments, among other purposes. Each state has their own center, which you can find here on the Small Business Administration’s (SBA) website.

Due: Within 20 days of hiring

A Final Step: File Storage

As a final step in our new hire checklist, you’ll also want to designate a safe place to store your personnel files. In particular, I-9s and W-4s need to be kept on-hand. We recommend using an electronic provider like Gusto to house all of your employee files. However, you could also use Dropbox or another cloud-based secure server. We caution against using paper files for security purposes.

Other New Employee Resources

As your business is starting to grow, you may want to consider looking at a few of our other employee-oriented resources:

• Best Payroll Software Comparison Guide
• New Hire Employee Forms Guide
• Offer Letter Template
• Non Disclosure Agreements
• Non Compete Agreements
• Employee Handbook Sample
• Employment Agreement Template

The Bottom Line

The 9 steps of our new hire checklist above may not be incredibly intuitive for the small business owner, but you need to check them off to be in a good position with taxes and your state (and for your new hire!) Go through the steps above on your own, or consider investing in Gusto (1st month is free) to ensure that you are doing it correctly and supporting you in the process. Click here to start your free trial.

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