Employer guideRead at source, 9 September 2026

How to Hire Employees for a Small Business: the First-Hire Checklist

Hiring your first employee is four setup tasks and four with a clock attached. Set up: an EIN, state unemployment insurance registration, workers' compensation cover, and the required workplace posters. On the clock: a signed Form W-4 when they start work, Form I-9 completed within three business days of the first day, a new hire report to your state directory within 20 days, and a Form W-2 to the employee and the SSA by 1 February 2027 for wages paid in 2026. The one most first-time employers have never heard of is the new hire report, and it is the one with a per-employee penalty attached.

Before anybody starts: the four setup items

An EIN. The IRS test is a list of yes-or-no questions, and the first one is "do you have employees?" A yes there means you need an Employer Identification Number regardless of your structure — a sole proprietor with one employee needs one just as a corporation does. It is free and applied for directly with the IRS.

State unemployment insurance. Registering with your state's workforce or revenue agency is what makes you an employer of record for UI tax purposes. It is a state process, it has its own deadlines, and no federal page will do it for you.

Workers' compensation. Also state law, and the thresholds differ — some states require cover from the first employee, others from three or five, and a few treat construction differently from everything else. This is the item most likely to be discovered late and the most expensive one to be wrong about.

Posters. Federal and state notices have to be displayed where employees can see them. There is no cost to the federal ones; they are downloadable from the Department of Labor.

One thing this page does not settle: whether the person you are about to hire should be an employee at all, rather than a contractor. That is a legal test about the work itself, not a preference about paperwork, and it is not something to decide from a checklist.

The four with a clock on them

The W-2 date is worth pausing on, because the rule of thumb everyone carries is "31 January". For the 2026 tax year that date falls on a Sunday, so the actual deadline for filing with the SSA and for furnishing copies B, C and 2 to employees is 1 February 2027 — on paper or electronically, the same date either way. Extensions are not automatic: one 30-day extension may be requested on Form 8809, and the IRS says it will grant it only in extraordinary circumstances or catastrophe.

On the I-9, the three-business-day rule is about Section 2, the employer's examination of documents. Which documents you may accept, and which of them ever need reverifying, is a separate question we cover in work authorization; the deadlines, editions and penalty structure are in Form I-9 requirements.

New hire reporting, the requirement nobody mentions

Federal law requires every employer to furnish a report to the State Directory of New Hires in the state where a newly hired employee works. The statute names the contents precisely: the employee's name, address and Social Security number, the date services for remuneration were first performed, and the employer's name, address and EIN. To the extent practicable the report is made on a W-4 form or an equivalent, and it may be mailed, or transmitted magnetically or electronically.

The timing is the part to diarise. Each state sets its own window, but the federal floor is that the report be made not later than 20 days after the date the employer hires the employee — or, for employers transmitting electronically, by two monthly transmissions not less than 12 and not more than 16 days apart. An employer with people in two or more states that reports electronically may designate a single state to receive all of its reports, provided it notifies the Secretary in writing.

What you keep, and for how long

Two different agencies, two different clocks, and they do not line up.

The IRS says to keep all records of employment taxes for at least four years after filing the fourth quarter for the year — and that list is longer than most people assume: the EIN, employee names, addresses, SSNs and occupations; every wage payment with dates; the W-4s; deposit dates and amounts with EFTPS acknowledgment numbers; copies of returns filed; and any W-2 copies returned as undeliverable. Records relating to qualified sick and family leave wages and to employee retention credits run to at least six years.

The FLSA has its own list of fourteen items for every nonexempt employee, and two retention periods: three years for payroll records, collective bargaining agreements and sales and purchase records, and two years for the records the wage computations rest on — time cards, wage rate tables, work schedules and records of additions to or deductions from wages. The Department of Labor is explicit that no particular form or timekeeping device is required: any timekeeping plan is acceptable as long as it is complete and accurate.

Pay rules that apply from the first hour

The federal minimum wage for covered nonexempt employees is $7.25 an hour. Where an employee is subject to both state and federal minimum wage law, the Department of Labor's rule is simply that the employee is entitled to the higher of the two — which in most states means the federal figure is irrelevant to you in practice, and in a handful it is the operative number.

The other pay rule to internalise before the first payroll rather than after it is that overtime is owed on hours over forty in a workweek for nonexempt employees, and that a workweek is a fixed, recurring period you define and record. Item five on the FLSA's list is the time and day the workweek begins, which is a question a first-time employer has usually never been asked.

Work out your dates

Enter a start date and this puts the federal deadlines on the calendar. State windows can be shorter than the federal floor for new hire reporting, so treat the date below as the outside limit rather than the target.

When to hire, and what finding the person costs

The administrative half is knowable. The judgment half is whether the work is there. A useful test for a first hire is whether the work is recurring and predictable rather than merely urgent — a backlog clears with overtime or a contractor, but a permanent stream of work does not, and paying overtime rates against a permanent stream is how small employers quietly lose margin for a year before hiring anyway.

The cost of finding the person is more measurable than most first-time employers expect. Across the 891 Boostpoint-managed Meta campaigns in our 2026 Social Job Advertising Benchmark, the median campaign cost $13.88 per applicant and the volume-weighted average was $8.02, with the middle half of campaigns between $6.48 and $29.74. Customer service and administrative roles were the cheapest family we measured at a $2.71 median; the frontline trades and technician roles most small employers hire for ran between $13 and $14. Those are advertising costs them, and an applicant is not a hire. What that person then costs to employ — wage plus payroll taxes, workers' compensation and benefits — is a separate stack, and the employee cost calculator works it through line by line.

If the hiring process itself is the unfamiliar part rather than the paperwork, our hiring process steps guide walks the sequence from requisition to offer, and what makes a good job ad covers the posting. Where to put that posting, and what each channel costs, is on how to advertise a job.

How to hire someone: the sequence from job ad to first day

The checklist above is the paperwork. This is the order of work for finding and choosing the person, whether it is your first hire or your fiftieth.

• Write down what the person must do on day one. Three to five tasks, the schedule, the pay, and anything the law requires for the job, such as a driver's license for a driving role. Everything else is a preference.
• Put pay, schedule and location in the first lines of the ad. They are what a working candidate checks first, and stating them saves you interviews with people who would say no.
• Keep the application short enough to finish on a phone. Name, phone, and two or three questions that rule people in or out. Across Boostpoint's 2026 Social Job Advertising Benchmark, the apply experience explained 70% of the variation in cost per applicant between campaigns.
• Contact every qualified applicant the same day. A text within minutes to set up a call or visit. The best candidates have applied elsewhere too.
• Interview everyone with the same questions and score the answers against the day-one tasks. For work you can watch, a paid trial shift tells you more than a conversation.
• Make the offer in writing with pay, schedule and start date, then run the four setup items and the four deadlines above.

The full sequence from requisition to offer is on hiring process steps.

Where to hire people: the channels that find hourly workers

Where you look decides who you find. The honest short version for a small employer hiring frontline workers:

• Your own people. Ask your employees who they know, for a specific opening and shift. It is the cheapest channel and limited only by the size of your team; see employee referral programs.
• Job boards. Good for reaching people who are actively searching today. Some let you post free, with paid options for visibility; the choices are compared on Indeed alternatives and niche job boards.
• Your state's public workforce system. The U.S. Department of Labor says there are approximately 2,300 American Job Centers nationwide, and their services to employers include referring job seekers to openings, matching candidates and arranging recruitment fairs.
• Schools and training programs for roles with a credential, such as trades, nursing assistants or CDL drivers.
• Facebook and Instagram job ads. These reach the people in your area who are working somewhere else and not searching, which for most hourly roles is the larger group. Meta runs them in the Employment special ad category, so you set a location radius of at least 15 miles and cannot target by age, gender or ZIP code (explained here).

Most small employers who hire workers regularly use two of these at once: referrals for the trusted few, and one channel that produces volume. How to advertise a job compares what each channel costs.

Frequently asked questions

The paperwork above is the easy half. Once you have a candidate in front of you, the structure that makes the decision defensible is on how to interview someone, and for roles whose work can be watched, the paid trial shift on working interview predicts performance better than any conversation.