Guide

First employee checklist for trade businesses

· Last updated Nov 2026 · Figures are estimates, not tax or insurance advice.

Hiring your first W-2 helper is a legal change, not just a staffing change. The list below is the order most one-person plumbing, electrical, HVAC, landscaping, or cleaning shops should follow. A shorter version, with the same official links, lives on the checklist section of the calculator page. Run the true-cost calculator first so the wage you offer still works after taxes and insurance.

1. Confirm the person is an employee

If you control how the work is done, set the schedule, and the helper is doing the same trade work as your business, you may already have an employee under the IRS common-law test and the DOL economic reality test. Read 1099 vs W-2 before you skip payroll. A contractor label does not settle it.

2. Get an EIN

Apply online, for free, with the IRS. You need an Employer Identification Number to file employment tax returns and often to open a payroll account. Start at the IRS EIN application and the EIN overview.

3. Register for state withholding and unemployment tax

In Indiana, register for withholding with the Department of Revenue and for unemployment tax with the Department of Workforce Development. Indiana SUTA is paid by the employer on the first $9,500 of each employee's wages; DWD lists 2.50% as a typical new-employer rate and 0.50% to 7.40% (or 9.40% if delinquent) as the broader range on its rate computation page. Other states have different wage bases; the calculator uses the U.S. DOL January 2026 table.

4. Put workers' compensation in force

Indiana generally requires a policy (or Board-approved self-insurance) under IC 22-3-5-1, and the Board says most businesses must have coverage, with the employee covered from the first day on the job. Details and advisory rate examples are in Do I need workers' comp for one employee in Indiana? Start at the Worker's Compensation Board.

5. On day one: I-9 and W-4

Complete Form I-9 for every hire, including U.S. citizens. Get a signed Form W-4 so you know how much federal income tax to withhold. The IRS Hiring employees page walks through eligibility, Social Security numbers, and withholding. If a new employee does not give you a W-4, the IRS says to withhold as if the employee is single.

6. Report the new hire

Indiana employers must report newly hired and rehired employees electronically to the Indiana New Hire Reporting Center within 20 days (IC 22-4-10-8). DWD explains the required data and the $25-per-employee penalty (or up to $500 in a conspiracy case) on its new-hire reporting page. Federal background is at ACF. Other states may have shorter deadlines.

7. Run payroll and deposit taxes

Withhold the employee share of FICA and income tax, and pay the employer share of FICA (6.2% Social Security up to $184,500 in 2026, plus 1.45% Medicare), FUTA, and SUTA. IRS Publication 15 is the employer's tax guide. A payroll service can file Forms 941, 940, W-2, and state returns. Compare current offers yourself: Gusto publishes plan prices; Paychex asks you to request a quote. See Gusto vs Paychex.

8. Post labor notices

Use the U.S. DOL FirstStep Poster Advisor and the workplace posters page for free federal posters. Indiana also requires the unemployment insurance poster, available from DWD, posted where employees can see it.

9. Only if you need them: legal documents and a web presence

An offer letter, handbook, or entity document is legal work. Partner links, which are not a substitute for an attorney: LegalZoom and, for a domain, Domain.com.

An offer letter, handbook, or entity document is legal work. Talk to an attorney licensed in your state; this checklist is not a substitute for that advice.

This checklist is a planning aid, not legal, tax, or insurance advice. Agency rules and deadlines change; the official page always controls.