Phase 1: Before The Employee Starts
Apply for an Employer Identification Number (EIN) from the IRS- All businesses that have
employees need a federal EIN, which serves as the business’ tax ID.
Register for State and local Taxes – States mandate payroll taxes, and you will need to pay these
on behalf of your employee.
Determine your Federal (FUTA) and State Unemployment Tax (SUTA) rates – we have two
great resources on this for more information – here and here.
Buy Worker’s Comp Insurance (required in most states) – This is, in general, required of all
employers in all states to protect employees from injuries sustained on the job. We tell you more
in our guide here.
Post required notices and posters around the workplace (if you have a physical space)
Phase 2: The Employee’s First Day
Collect a signed Federal W-4 form for tax withholding (available here) – This does not need to
be submitted to the IRS, but you should store it in a paper file or electronically in a personnel file
Collect a signed State W-4 form for tax withholding (in some states only: check here) – store it in
a paper file or electronically in a personnel file.
Get direct deposit information from employee from a voided check (if applicable)
Phase 3: The Employee’s First 3 Weeks of Employment
Once your employee starts, you need to move quickly on the final steps for them.
Collect a signed I-9 Form for work eligibility verification (within 3 days of employee’s start
date)—You’ll want to make sure the employee can verify their identity and eligibility to work in
the United States with a passport or two forms of identification. Accepted identification forms
are detailed here.
Register your employee in your state’s New Hire Reporting Program (within 20 days)—A new
requirement since 1996, you will want to make sure that you report all new or rehired employees
to your state.
For a more detailed rundown of these steps, including links to forms and other resources, check
out our New Hire Checklist.
Step 1: Basic information
Step 2: Adding employees
Step 3: Federal tax setup
Step 4: State tax setup
Step 5: Bank account setup
Step 6: Choose your pay period
Step 7: Sign company forms
Step 8: Purchase workers compensation insurance
(optional) Adding benefits