Start Here: Hiring Your First Employee
Hiring your first employee triggers a stack of federal + state registrations: EIN (if you don't have one), federal payroll withholding (Form 941), FUTA (Form 940), state UI/SUTA, workers' comp, and new-hire reporting. Most small employers outsource the mechanics — but the legal liability stays with you.
Last reviewed:
Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from a qualified CPA, Enrolled Agent, or tax attorney, or contact the IRS. Read our editorial scope →
Your essential reading list
- Worker classification (1099 vs W-2) — The decision that determines everything else — get it wrong and the IRS reclassifies.
- Reasonable compensation — If you're also paying yourself as an S-Corp owner-employee.
- Multi-state payroll — Remote employees create nexus in their state of residence.
Calculators you'll actually use
- Reasonable Compensation Calculator — BLS OEWS salary benchmarks for the role you're hiring.
- State Tax Comparison — Employer-side payroll cost varies — CA SDI, NY MCTMT, WA Cares.
- Salary vs Distribution Calculator — If hiring changes your own owner-comp picture.
Background guides
- Quarterly estimated taxes — How owner estimated tax interacts with payroll deposits.
- Multi-state tax + nexus — Remote employees = new state income + payroll tax obligations.
- BOI reporting — Beneficial Ownership Information — hiring doesn't change who controls.
Also useful
- California employer overlay — EDD registration, SDI, WC, CA-specific new-hire reporting.
- New York employer overlay — DOL registration, NYS withholding, Paid Family Leave.
- Texas employer overlay — No state income tax, but TWC SUTA registration is mandatory.
- Crisis signposting — If you missed payroll deposits — Trust Fund Recovery Penalty is personal.
What to do next
Decide W-2 vs 1099 honestly using the worker classification guide. If W-2, get a payroll provider (Gusto, ADP, OnPay) before the first paycheck — DIY payroll-tax compliance is rarely worth the risk.
Different situation? Back to all start-here paths.