How to hire your first employee in the United States
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring your first US employee means registering with federal and state agencies, setting up payroll withholding, and meeting a short but firm set of legal obligations before the person's first day. Get those steps right and the ongoing process is straightforward.
Get your employer identification number (EIN)
Before you can hire anyone, you need an EIN from the IRS. This is your federal tax ID — the number you put on every payroll filing, W-2, and employment tax deposit. You can apply online at irs.gov and receive your EIN immediately. If you already have an EIN for your business, you do not need a new one.
Register with your state
Federal registration is just the first layer. You also need to register with your state before you run payroll. That typically means two things:
- State income tax withholding account — required in any state that has a state income tax. States like Texas, Florida, and Washington have no state income tax, so this step does not apply there. In states that do, registration is usually done through the state revenue or taxation department.
- State unemployment insurance (SUI) account — nearly every state requires employers to register for and pay state unemployment tax. This is your obligation as the employer; it is not withheld from the employee's wages. Contact your state's department of labor or workforce agency to register.
Some states also require registration with a separate workers' compensation board. Check your state's requirements early — a few states have very short windows (sometimes ten days from the hire date) to register.
Complete required new-hire paperwork
Several documents must be completed before or on the employee's first day.
Form I-9 (employment eligibility verification): Required for every employee. The employee completes Section 1 on or before day one; you complete Section 2 within three business days of the start date. You must physically examine the documents the employee presents — or use an authorized remote verification process if applicable. Retain I-9s for at least three years from the hire date or one year after employment ends, whichever is later.
Form W-4: The employee uses this to tell you how much federal income tax to withhold from their paycheck. Federal income tax is progressive, running from 10% to 37% depending on the employee's income and filing situation. The W-4 drives those withholding calculations. No W-4 on file means you withhold at the default rate for a single filer with no adjustments.
State withholding form: Most states that impose income tax have their own equivalent of the W-4.
New-hire reporting: Federal law requires you to report every new hire to your state's new-hire reporting agency within 20 days of the hire date (some states are faster). You report the employee's name, address, Social Security number, and your EIN. This is used to enforce child-support orders.
Set up payroll and understand your tax obligations
Once paperwork is in order, you need a payroll process that handles withholding and deposits correctly.
Federal payroll taxes you are responsible for:
- Employee withholding: Federal income tax (per the W-4), Social Security at 6.2% of wages up to the annual wage base, and Medicare at 1.45% with no cap. High earners are also subject to a 0.9% Additional Medicare surcharge, though this is withheld only after wages exceed the applicable threshold.
- Employer match: You pay a matching 6.2% for Social Security and 1.45% for Medicare out of your own funds — on top of what you withhold from the employee.
- Federal unemployment tax (FUTA): An employer-only tax on the first portion of each employee's wages each year.
You deposit these taxes on a schedule (monthly or semi-weekly) set by the IRS based on your total tax liability. You also file Form 941 each quarter to reconcile what you withheld and deposited.
By January 31 of the following year, you must furnish each employee with a Form W-2 and submit copies to the Social Security Administration.
For a broader look at running multi-jurisdiction payroll, see how Mellow runs payroll across six countries.
Know your baseline employment law obligations
A few federal requirements apply from day one regardless of your industry or state.
At-will employment: In most of the US, employment is at-will, meaning either party can end the employment relationship at any time for any lawful reason. Document your expectations clearly in an offer letter even so.
Federal anti-discrimination law: Title VII, the ADA, and the ADEA apply to employers once you reach certain employee thresholds, but best practice is to follow non-discriminatory hiring procedures from the start.
Minimum wage: The federal minimum wage sets a floor; many states and cities are higher. Always pay the applicable local rate if it exceeds the federal rate.
Paid leave: There is no federal statutory paid annual leave or sick leave. Several states and municipalities do mandate paid sick leave, so check local law before you finalize your offer.
Poster requirements: The Department of Labor requires employers to display several workplace posters. These are available free from dol.gov and must be posted where employees can see them.
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