Hiring Your First Employee

The go-to guide for hiring your first employee.

Co-workers looking at digital tablet inside small business artisan retail store.
Author By Team Roll on April 01, 2022
Reading Time 4 min read

If you're ready to get to the next level with your business, there's one key lever that will get you there — your first employee. Yet, tax, payroll, benefit, and general onboarding considerations need to be made when hiring your first employee.

Hiring Your First Employee Checklist

Whether you're hiring your first employee now or planning for the future, take a cue from this hiring checklist.

1. Apply for an EIN. If you don't have an Employer Identification Number yet, get one. An EIN is like a Social Security number for your business. You can apply for one through the IRS website.

2. Consider your finances. Make sure you're financially equipped to hire your first employee. Check your books and review other financial documents to verify your small business is financially stable enough to add another salary to the mix. And, if you ever need to delay payroll, or skip it till more funds come in, Roll can make it happen.

3. Source the right talent. Look to referrals and your professional network to find qualified candidates. If that search ends up as a dead-end, look to online job posting websites.

Temporary workers can be a great resource for helping small business owners and startups meet short-term business needs, such as an increase in production demands or filling in for an employee who is on a leave of absence. You can use a third party, such as a staffing agency or a recruiter, to find temporary workers, but sometimes employers source them directly. However, there are different nuances to paying contractors, which is important to take note of.

4. Interview candidates. After you find a few qualified potential hires, get to know them. And before you meet with them (virtually or in person), make sure you're prepared to ask the right questions and give detailed information about your small business.

5. Do your diligence to make sure the candidate is qualified. Look for references and run a background check.

Keep in mind many states and local jurisdictions have enacted laws that restrict employers from asking an applicant about their criminal background on application forms. Some go even further, restricting these types of questions until after the employer makes a conditional job offer. These restrictions are often referred to as "ban the box" laws.

6. Extend an offer. Once you've found the right person, make them an offer. Your offer letter should include full employment details, like how much they're getting paid, when they're paid, their new title, and essential responsibilities.

7. Register your employee with your state government. Most states require you to submit employee names and Social Security numbers. First, reference the Department of Labor website, then look to your state government's Department of Labor website for this information.

8. Get your ducks in a row from a tax perspective. Once your first employee accepts the offer, have them complete and return an I-9 form to confirm U.S. work eligibility. Then, have them complete a W-4 Form to determine the correct federal income tax taken from their paychecks. State law also requires employers to withhold taxes, so furnish the correct state withholding form for your employee, too. You should also fill out a W-2 form each year. Here are the general requirements from Glassdoor:

Every employer who pays remuneration, including non-cash payments above a certain threshold for the year for services performed by an employee must file a Form W-2 for your employee from whom income, Social Security, or Medicare tax is withheld. Glassdoor notes the following caveats include, "If income tax would have been withheld if the employee had claimed no more than one withholding allowance or had not claimed exemption from withholding on Form W-4."

While taxes can be daunting with or without employees, let Roll help.

9. Determine your first employee's payroll details. Figure out the amount of federal income tax to withhold based on your employee's tax filing status, income, and what they filled out on their W-4. Remember to withhold the proper FICA tax amount, the employee's portion of Social Security and Medicare tax.

As part of payroll, you should deposit withheld federal income taxes from your employees' pay, as well as the employer and employee portions of Social Security and Medicare taxes. Make these deposits electronically via the Electronic Federal Tax Payment System (EFTPS).

10. Report required unemployment payments. "The U.S. Department of Labor states that, generally, businesses must pay both federal and state unemployment taxes if they employ at least one person for 20 weeks in a calendar year, or if their employees' wages account for over $1,500 per quarter," notes the U.S. Chamber. If this applies to you, you should pay quarterly dues via IRS Form 940.

Once You're Set Up, Rely on Roll

While not every part of the onboarding process is simple, there's a solution to ease the burden of your first employee's payroll requirements.

For a modern and intuitive payroll solution, say hello to Roll – the first chat-based payroll app for small businesses backed by ADP®. The app makes it easy for you to implement flexible and efficient payroll processes — without the hassles of calculating complex taxes, benefits, and other withholdings.

Download Roll, onboard yourself in just minutes, and then text away.

Read more about Roll.

Small Business Payroll • Small Business • Business Basics
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