Before hiring an employee, you must do some work to legally establish yourself as an employer. These tasks essentially let the government know that you are hiring people and trigger some ongoing filing and other requirements
Get an employer identification number (EIN) from the IRS. You’ve probably obtained an EIN, but if you haven’t, apply for one before hiring. You will need it when completing various government forms, reports, and returns required of employers.
Don’t forget workers’ compensation insurance. Many states require all of their employers to have workers’ compensation coverage, obtained either through paying into a state fund or buying a separate policy. Some states exempt employers with no more than two or three employees from this rule, but it might make sense to purchase coverage anyway. Beyond the legal requirements, having workers’ compensation coverage can save you a bundle if one of your employees is hurt on the job.
Register with your state’s labor department. Once you hire an employee, you are obligated to pay state unemployment taxes. These payments go to your state’s unemployment compensation fund, which provides short-term relief to workers who lose their jobs. Typically, you must complete some initial registration paperwork, then pay money into the fund periodically. Unemployment compensation is a form of insurance, so the amount you pay in will depend, in part, on how many of your former employees file for unemployment (just as your insurance premiums depend, in part, on how many claims you file against the policy).
Finding the forms. Start at the federal Department of Labor Map, which provides a link to each state’s unemployment agency. Once you get to your state agency’s website, look for a tab or link on unemployment or find the material for employers or businesses. Many states provide downloadable forms and online information on your responsibilities.
Hang up required posters. Even the smallest businesses are legally required to post certain notices letting employees know their rights under a variety of workplace laws. The federal government wants you to put up a handful of notices; many states have additional posting requirements.
Finding the forms. The federal Department of Labor’s website has a special page detailing poster compliance requirements; it also provides downloadable posters. Your state’s labor department probably also has any required posters on its website. If you’re having trouble figuring out which requirements apply to you (or you don’t want to post a dozen different notices), you can usually purchase an all-in-one poster that combines all required state and federal notices from your local or state chamber of commerce.