When To Hire Your First Employee
The obligations that arrive with the first hire are larger than most owners anticipate.
The first employee changes the legal character of a business. Everything after that is a variation; the first one is a threshold.
The obligations that attach immediately
An employer must register with federal and state authorities, withhold and remit payroll taxes, carry workers' compensation and disability insurance, contribute to unemployment insurance, and comply with wage payment, notice and record-keeping rules.
New York requires written notice of pay rate and payday at hiring, and pay stubs with specified information. These are strict requirements with real penalties, and they are among the most commonly missed by small employers.
The cost is not the salary
Budget for employer payroll taxes, insurance, payroll processing, equipment and the time you will spend managing rather than working. A useful planning assumption is that fully loaded cost meaningfully exceeds salary.
Contractor is not a shortcut
Engaging someone as an independent contractor to avoid these obligations works only if they genuinely are one, and the tests focus on control over how the work is done rather than on what the agreement says.
Misclassification creates liability for back taxes, unpaid insurance contributions and penalties. New York enforces this actively, and construction and freight have specific statutory presumptions.
Timing
The financial signal is sustained demand you are turning away or serving badly, and enough visibility of revenue to carry the cost through a slow quarter. Hiring against a single large client is a concentration risk.
What to hire first
Owners tend to hire someone to do the work they enjoy least. Frequently the better first hire does the work that only you can currently do but that does not require you specifically — the work that is limiting capacity.
Do it properly
Written offer, written job description, the required notices, payroll and insurance in place before the first day. Retrofitting compliance after someone has been working for a month is more expensive and creates a record you would rather not have.
This is general information, not legal advice. Speak to a qualified New York attorney before acting on any of it.
