7 Bookkeeping Tasks to Do Before You Hire Your First Employee
Sam's List Editorial | 2026-07-16
7 Bookkeeping Tasks to Do Before You Hire Your First Employee Your first hire is exciting. It is also the moment your business becomes an employer in the eyes of the IRS and your state, and that comes with paperwork you cannot skip. Get the bookkeeping and payroll setup wrong and the penalties stack up quietly, often long before you notice. Here are the seven tasks to finish before your new employee's first day. The theme running through all of them: an employee is not just a salary. The real cost includes payroll taxes, benefits, and the systems to track it all. Set that up first and the hire feels like growth instead of chaos. 1. Get Your EIN and Register for Payroll Taxes Before you run a single paycheck, you need a federal Employer Identification Number and registration with your state for income tax withholding and unemployment insurance. The EIN is free from the IRS and takes minutes. State registration varies, and some states take longer to issue account numbers than new employers expect, so start early. Skipping this is not an option, because you cannot legally withhold and remit payroll taxes without it. The limitation is that registration alone does not tell you what to withhold, which is where the next steps come in. 2. Classify the Worker Correctly Decide, honestly, whether this person is an employee or a contractor. The distinction turns on control and the working relationship, not on what is convenient for your cash flow. Misclassifying an employee as a contractor to dodge payroll taxes is one of the most common and most expensive mistakes small employers make. Get it right and your tax treatment is clean. Get it wrong and you can face back taxes, penalties, and interest. When the facts are genuinely close, this is worth a conversation with a professional rather than a guess. 3. Set Up a Payroll System and Connect It to Your Books Choose a payroll system before the first pay run, not after. The system calculates withholding, files payroll tax returns, and remits payments on schedule. Just as important, it should feed your bookkeeping so wages, taxes, and benefits land in the right accounts automatically. Bookkeeper 360 is one Sam's List firm that specializes in payroll-integrated bookkeeping for small businesses, tying payroll into the general ledger so your reports stay accurate as headcount grows. Bookkeeper 360 has 2 verified client reviews on Sam's List as of 2026-06-26. Reviews reflect the experiences of individual clients, do not represent an endorsement by Sam's List, and are not indicative of future results. A connected system...
