How do you hire an employee, step by step?
How to hire an employee step by step: US federal rules as of October 30, 2026. State rules differ.
Hiring a US employee takes 12 steps: define the role and pay, post it, screen and interview with a scorecard, check references and (where allowed) background, make a written offer, then complete Form I-9, Form W-4, state new-hire reporting and payroll setup. Most legal deadlines fall in the first three days of work.
At a glance
- Before you post: pay range, job duties, exempt or non-exempt status, and a budget.
- Before the offer: structured interviews, references, any background check done with consent.
- Within 3 business days of the start date: Form I-9 Section 2 complete.
- Within your state's deadline (federal outer limit 20 days): new-hire report.
- Never skip: written offer, correct worker classification, workers' comp and tax registrations.
The 12 steps
| # | Step | Owner | When | Notes |
|---|---|---|---|---|
| 1 | Decide the role is a W-2 employee, not a contractor | Founder / HR | Before posting | Control over how, when and where work is done points to employee. See the IRS and DOL tests in Sources. |
| 2 | Set pay, status and budget | Hiring manager | Before posting | Exempt vs non-exempt under the FLSA decides overtime. Check state minimums and pay transparency laws. |
| 3 | Register as an employer | Finance | Before first payday | EIN (IRS), state withholding, state unemployment insurance, workers' compensation. Requirements are state-specific. |
| 4 | Write the job description | Hiring manager | Week 0 | Start from a template. Include pay range where required. |
| 5 | Post and source | Recruiter / manager | Weeks 0-3 | One job board, your careers page, referrals. Track source per applicant. |
| 6 | Screen | Recruiter | Weeks 1-3 | Same criteria for everyone. Keep written reasons. |
| 7 | Interview with a scorecard | Panel | Weeks 2-4 | Use a structured interview and scorecard. |
| 8 | Check references | Hiring manager | Weeks 3-4 | Ask the same questions of each referee. |
| 9 | Background check, if you use one | HR | After conditional offer | FCRA disclosure and written consent first. See background checks. |
| 10 | Make a written offer | Hiring manager | Week 4 | Use an offer letter template. State at-will status only where it is true for the role and state. |
| 11 | Day-one paperwork | HR | Start date | Form I-9 (employee Section 1 by day one; you finish Section 2 within 3 business days), Form W-4 and the state withholding form, direct deposit, handbook acknowledgements. |
| 12 | Report and onboard | HR / Finance | First 20 days | State new-hire report; display required federal and state posters; set up payroll; 30-60-90 day plan. |
What does hiring an employee cost beyond salary?
You pay employer payroll taxes and insurance on top of wages. The federal items are Social Security and Medicare (FICA) and federal unemployment tax (FUTA); state unemployment insurance and workers' compensation vary by state and your classification codes. Rates change, so take current figures from the IRS Employment Taxes page. To total your own recruiting spend, use the cost-per-hire calculator.
How long should hiring take?
There is no single correct number. Plan in your own data: track days from posting to accepted offer for each role and use your last three hires as the baseline.
Should you use an employer of record instead?
If the worker is in a place where you have no registered entity, an employer of record can be the legal employer. For a US employee in a state where you are already registered, you normally hire directly.
Hiring checklist you can copy
ROLE: [Job title] STATUS: [Exempt / Non-exempt]
PAY: [$ range or hourly] START DATE: [Date]
[ ] Classification confirmed (W-2)
[ ] State registrations current: [State] withholding / UI / workers' comp
[ ] Job description approved, pay range included where required
[ ] Scorecard built with [4-6] criteria
[ ] Interviews done, scorecards submitted by [Date]
[ ] References: [2] completed
[ ] Background check (if used): disclosure + consent signed [Date]
[ ] Offer sent [Date], accepted [Date]
[ ] I-9 Section 1 by [Start date]; Section 2 by [Start date + 3 business days]
[ ] W-4 + state form received
[ ] New-hire report filed [Date]
[ ] Posters displayed / providedFAQ
Do I need a lawyer to hire my first employee? Not for every step, but have an employment attorney or a qualified adviser review your offer letter, handbook and state registrations once, especially for exempt classification.
Can I start someone before the I-9 is done? Section 1 must be completed by the employee no later than their first day of work for pay. You then have three business days to complete Section 2 after the start date.
What is new-hire reporting? Employers report new and rehired employees to a state agency so child-support orders can be enforced. Federal law sets an outer limit of 20 days; many states are shorter.
Is a 1099 contractor cheaper? Only if the person truly is one. Misclassification can bring back taxes and penalties. Check the IRS and DOL tests.
Where do I post the job on LiveRec? See how to post a job. Employers verify their business first; see verify your business.
Next step: Post your first job on LiveRec or start from a job description template.
Related
Sources
See front matter. Accessed 30 October 2026.
- Form I-9 timing: 8 CFR 274a.2(b)(1): https://www.law.cornell.edu/cfr/text/8/274a.2 (Section 1 at the time of hire, Section 2 within three business days; checked 2026-10-30)
- New-hire reporting: 42 U.S.C. 653a: https://www.law.cornell.edu/uscode/text/42/653a (federal outer limit 20 days after hire; checked 2026-10-30).
This is general information, not legal, tax or immigration advice. Rules change and your situation may differ. Consult a licensed attorney or qualified adviser.