Posted On: 2026-10-01
Posted By: Lery

Hiring Your First Employee: Complete Checklist

This article is general information for employers. It is not legal, tax or accounting advice. Requirements vary significantly by country, state and employer size and change over time, so confirm your specific obligations with an employment attorney, an accountant, or your payroll provider before hiring.

Your first hire is the moment a project becomes a company. It is also the moment you acquire a set of legal obligations that did not exist the day before, most of which are invisible until something goes wrong, and several of which have to be in place before the person starts rather than afterwards.

The good news is that the list is finite. The bad news is that most first-time employers discover it in pieces: the payroll registration after the first pay run is late, the workers' compensation requirement after an injury, the handbook after a dispute. Doing it in order costs a fraction of doing it retroactively.

This guide is the complete sequence, from deciding whether you should hire at all through to the first ninety days, with the costs people routinely underestimate.

Before You Hire: Three Questions

1. Do you need an employee, or something else? Genuine alternatives include a contractor for project work, an agency for specialised functions, an employer of record if the person is in another country, or automation of the task. Each has a different cost and risk profile, and the contractor route in particular is heavily misused, as our employer of record guide and employment law mistakes guide explain.

2. Can you afford the full cost, not the salary? Budget salary plus employer taxes and mandatory contributions, insurance, equipment, software licences, recruiting cost, and the hidden cost of your own time spent managing. A common planning figure is that an employee costs meaningfully more than their gross salary once everything is counted, often in the region of 1.2 to 1.4 times, depending on the country and the benefits offered.

3. Is the role defined enough to hire against? If you cannot write down what success looks like in six months, you are not ready to hire, you are ready to think. Vague first roles produce mismatched hires and early departures, which is the most expensive outcome available.

The Registration and Compliance Layer

This is the part that must exist before the first payday, and the specifics vary by country and state.

Employer registration with the tax authority, which in the US means an employer identification number, and in other markets an equivalent payroll or employer registration.
State, provincial or local registration wherever the employee physically works, which is a separate step from your business registration and is the single most common miss for remote hires.
Payroll tax accounts, including income tax withholding and unemployment insurance contributions.
Workers' compensation insurance, which is mandatory for most employers in most jurisdictions and is one of the few items where going without can create personal liability. Our workers' compensation guide explains how the system works from the employee's side.
Any mandatory insurance beyond that, which varies, and employment practices liability insurance, which is optional but increasingly sensible.
Required workplace notices and posters, which most jurisdictions mandate and which cost nothing to comply with and small fines to ignore.

If the employee is in a different state or country from you, treat that location's rules as the governing ones for employment matters: minimum wage, overtime, leave entitlements, final pay timing, notice requirements and more.

The Hiring Process Itself

Three things to get right, because mistakes here create claims before the person even starts.

Write a real job description. Title, purpose, the specific outcomes expected, required and preferred qualifications, location and work arrangement, and the pay range. Many jurisdictions now require pay ranges in postings, as our pay transparency guide explains, and candidates increasingly ignore postings without one.

Interview consistently and lawfully. Use the same core questions for every candidate, score against defined criteria, and keep questions off protected characteristics including age, family plans, health, religion and national origin. In a growing number of places you also may not ask about salary history, which our salary history guide covers. Untrained interviewers cause most problems here, and the fix is a written interview guide.

Run background checks properly if you run them at all. Where consumer reports are used for employment decisions, there is usually a required process of disclosure, authorisation and a pre-adverse action step before deciding. Skipping the steps creates exposure even when the decision itself was reasonable, as our background checks guide describes.

The Offer and the Paperwork

The offer letter should state the role, start date, pay rate and frequency, employment classification, reporting line, work location, any probation arrangement, and whether employment is at-will where that concept applies. Keep it clear and avoid language that inadvertently promises job security or fixed procedures, which can undercut at-will status.

Classification must be decided correctly, both employee versus contractor and, within employees, whether the role is exempt from overtime. Exemption depends on actual duties and pay level, not on job title or salary alone, and misclassification is the most expensive error in small business employment, as our unpaid overtime guide sets out.

Before or on day one, collect:

Signed offer letter or employment contract.
Work authorisation verification as required in your jurisdiction, completed on time and without demanding specific documents from particular individuals, which is itself a form of discrimination. Our E-Verify guide covers the US process.
Tax withholding forms.
Bank details for payment.
Emergency contact and, where applicable, beneficiary nominations for any benefits.
Signed acknowledgement of your policies.
Any confidentiality or intellectual property assignment agreement, which should be signed at or before start rather than months later.

The Policies You Need From Day One

You do not need a hundred-page handbook. You do need a short, clear set of written policies, because inconsistency is what creates claims.

At-will statement where applicable, with a clear disclaimer that the handbook is not a contract.
Anti-harassment and anti-discrimination policy with more than one reporting route, since a single route through the person's own manager fails precisely when it matters.
Complaint and investigation procedure.
Leave policies matching the entitlements of the employee's actual location.
Hours, timekeeping and overtime rules, with a written prohibition on off-the-clock work that you actually enforce with managers.
Expenses, equipment and remote work arrangements, including who pays for what.
Data, confidentiality and acceptable use.

Then follow them. A policy you ignore is worse than one you never wrote, because it becomes evidence of inconsistency.

Payroll Setup

Decide early whether you are running payroll yourself, using a payroll provider, or using a professional employer organisation. For a first hire, a payroll provider is usually the right answer, because the cost is modest against the risk of filing errors and missed deadlines.

Whatever you choose, make sure you have: a pay schedule that complies with local frequency requirements, correct withholding set up for the employee's work location, a record-keeping system for hours worked where the role is non-exempt, a process for remitting contributions on time, and payslips that meet local content requirements. Your employee will read theirs, and our payslip guide is a reasonable thing to send them in week one.

Keep records. Most jurisdictions require employers to retain payroll, tax and personnel records for a number of years, and those records are your defence in any dispute.

The Costs People Underestimate

Employer taxes and contributions, which add a significant percentage on top of salary and vary widely by country.
Workers' compensation premiums, priced by role and risk.
Benefits, especially health coverage where the employer carries most of the premium.
Equipment, software seats and workspace.
Recruiting, whether through job board spend, agency fees or your own time.
Onboarding time, both the new person's unproductive early weeks and the time your existing team spends supporting them.
The cost of a bad hire, which is the largest of all, and is reduced mainly by defining the role properly and interviewing consistently.

The First Ninety Days

Hiring is not finished when the person starts. The first ninety days determine whether the hire works.

Before day one: equipment ready, accounts created, first-week schedule drafted, and someone assigned to look after them.

Week one: paperwork completed, policies acknowledged, payroll confirmed, introductions made, and an explicit conversation about what success looks like in thirty, sixty and ninety days.

Weeks two to twelve: regular one-to-ones from the start rather than when something is wrong, early feedback given promptly and specifically, and documented check-ins at the thirty and sixty day marks.

At ninety days: a proper review against the criteria you set, in writing. If the hire is not working, this is the moment to address it directly, while expectations and documentation are fresh.

Document performance as you go, contemporaneously, not retrospectively. If a separation ever becomes necessary, the quality of that record is what distinguishes a clean exit from a claim, as our wrongful termination guide explains.

Hiring Your First Employee FAQ

What do I legally need before hiring my first employee? Typically an employer tax registration, payroll tax accounts, registration in the jurisdiction where the employee works, workers' compensation insurance where required, work authorisation verification, and required workplace notices. Specifics vary by country and state.

How much does an employee really cost? More than salary. Once employer taxes, mandatory contributions, insurance, benefits, equipment and recruiting are counted, total cost commonly runs meaningfully above gross pay, often in the region of 1.2 to 1.4 times depending on jurisdiction and benefits.

Can I hire a contractor instead to keep it simple? Only if the person is genuinely an independent business with control over their own work and other clients. Misclassifying an employee as a contractor creates retroactive liability for taxes, contributions, benefits and more.

Do I need an employee handbook for one person? You need written policies, even if short. At-will status where applicable, anti-harassment with multiple reporting routes, leave, timekeeping and confidentiality are the minimum, and consistency is the point.

What if my employee works in a different state or country? Their work location generally governs employment rules, including wages, overtime, leave and termination, and you will usually need to register there. This is the most common compliance gap in remote hiring.

Should I use a payroll provider or a PEO? For a first hire, a payroll provider is usually sufficient and inexpensive. A PEO adds HR administration and benefits access through co-employment and tends to make sense as headcount grows.

How do I avoid problems in interviews? Use a written interview guide with the same core questions for every candidate, score against defined criteria, avoid protected characteristics, and train anyone who interviews.

What should happen in the first ninety days? Paperwork and payroll confirmed in week one, explicit success criteria agreed, regular one-to-ones from the start, documented check-ins at thirty and sixty days, and a written review at ninety.

Get the Order Right and It Is Straightforward

Hiring your first employee is not difficult, but it is sequential. Decide you genuinely need an employee, budget the full cost rather than the salary, define the role well enough to hire against, complete the registrations and insurance before the start date, classify correctly, write the short set of policies you will actually follow, set up payroll properly, and then invest in the first ninety days as deliberately as you invested in the search.

Do it in that order and your first hire becomes the foundation of a team. Do it backwards and it becomes the reason you meet an employment lawyer.

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