Hiring a first employee is a major step because it adds capacity and creates ongoing responsibilities. Before recruiting, make sure the work is recurring, the business can support the cost and the role has a clear outcome. Employment requirements vary by federal, state and local law, so this guide is an orientation rather than legal or tax advice.
Confirm that a hire is the right solution
List the work you need done, how many hours it requires and which tasks only the owner can perform. Consider whether a process improvement, temporary support or qualified independent contractor is appropriate. Worker classification depends on the actual relationship and applicable law, not simply the label in a contract.
Define the role
Write a job description with responsibilities, essential qualifications, schedule, location, compensation range where required and reporting line. Focus on outcomes rather than an unrealistic list of every possible task. Identify which skills are essential on day one and which can be trained.
Plan the full employment cost
Budget for wages or salary, employer payroll taxes, workers’ compensation where required, benefits, recruiting, equipment, training and management time. Check applicable minimum wage, overtime, leave, pay-frequency and posting requirements. The total cost is more than the employee’s take-home pay.
Recruit and select consistently
Use relevant job channels and a structured interview process. Ask candidates comparable, job-related questions and document the reasons for decisions. Check references and credentials consistently and lawfully. Background checks and screening can trigger specific notice, consent and fair-chance rules; obtain qualified advice before using them.
Complete hiring administration
Employers generally need to complete required federal employment forms and payroll setup, and may need state and local registrations. Review IRS employer guidance and the relevant state labor and tax agencies. Confirm eligibility verification, new-hire reporting, payroll withholding and recordkeeping requirements for your situation.
Prepare the first 30 days
Provide the tools, access, training plan, manager contact and clear priorities. Explain how work is assigned, reviewed and escalated. Use least-privilege access for systems and customer data. Schedule check-ins during the first week and at 30 days to identify obstacles early.
First-hire checklist
- Confirm workload, role and affordable total cost.
- Write a clear job description and selection criteria.
- Check federal, state and local employer requirements.
- Prepare payroll, required forms and insurance.
- Use a consistent, job-related interview process.
- Set up equipment, access, training and supervision.
- Document expectations and feedback.
Related small-business guides
- How to Improve Employee Retention in a Small Business
- How to Manage Daily Business Operations Efficiently
- Standard Operating Procedures (SOPs): A Small Business Guide
Frequently asked questions
Do I need an EIN to hire?
Employers commonly need an EIN for federal tax administration. Confirm your specific obligations using official IRS guidance.
Can I hire a contractor instead?
Only when the working relationship genuinely meets the applicable classification tests. Misclassification can create significant tax and employment liabilities.
What should onboarding include?
Cover role expectations, pay and schedule, workplace policies, safety, tools, data security, training and the first-month goals.
Consult an employment attorney, payroll professional or relevant government agency for requirements in your state and industry. Official starting points include IRS small-business resources and US Department of Labor.