Hiring your first employee in Texas: Official guide

Hey, future Texas employers: We’ve put together what you’ll need to make your first hire efficiently (and legally).

In Part 1, we’ll cover how to make the hire, and in Part 2, we’ll cover the actual hiring process (and what paperwork you’ll need for your new employee).

Quick index

Part 1: Preparing to hire your first Texas employee

• Get organized and make a plan
• Apply for your Employer Identification Number
• Get ready for payroll taxes
• Prepare your employee handbook
• Get workers’ compensation and other employment coverages
• Prepare for payroll

Part 2: How to hire employees in Texas

• Write and post a job description
• Choose and interview applicants
• Hire and onboard your new employee
• Report your hire with the State of Texas

Okay, let’s get started.

Part 1: Preparing to hire your first Texas employee

Getting a new employee is exciting, and you might be tempted to start advertising your new job immediately.

But hold up! Before you even think about posting the job, you’ll need to get your business set up for employment. Preparing your company isn’t difficult, but you need to stay organized to make sure you don’t miss anything important. Here’s how to approach the process:

1. Get organized and make a plan

First, get out your calendar and make a plan and timeline. It will take time to get your hiring paperwork in order, finalize your business insurance coverages, and get your business ready for an employee. Include the time it will take to find applicants, gather and sort their application materials, and do interviews. Also, leave some time between hiring and onboarding—your new employee will need some time to make their transition.

A quick word of advice: Everything always takes longer than you think it will. (Except for getting workers’ comp, which could take much less time than you think with Huckleberry.) So when you’ve finished calculating your projected timeline, add a week—just to be safe.

In the meantime, now is a great time to acquaint yourself with the Texas Workforce Commission website.

2. Apply for your Employer Identification Number

Before you go any further, you’ll need to get an Employer Identification Number from the federal government. It’s often shortened to EIN, and it’s basically how the federal government will recognize your business from now on.

Don’t worry about this step—getting an EIN is simple, and if you have a few minutes, you can do it right now. Get your Employment Identification Number at the IRS website.

3. Get ready for payroll taxes

Now that you’re about to hire an employee, you and your business are subject to the state Unemployment Compensation Act, which means you’ll need to pass along unemployment tax payments to the state.

To do that, you’ll need to register your business with the Texas Workforce Commission. The process is free and online, and it only takes about 20 minutes to complete.

4. Prepare your employee handbook

Don’t panic—putting together an employee handbook sounds like a huge task, but it doesn’t need to be! That’s because, when you get down to first principles, an employee handbook is just a collection of written information that helps new team members understand the expectations at your business.

An employee handbook isn’t required in the State of Texas, and so it can be as short or as long as you like. Preparing 3 to 4 simple, clear pages of basic company rules and policies is a fantastic place to start—and will go a long way to helping your new employee feel comfortable.

Need some inspiration? (Check out this article to get some ideas of what to include in your new employee handbook. You can also Google “sample Texas employee manuals” to get more guidance.)

5. Get workers’ compensation and other employment coverages

Workers’ compensation coverage protects your employee if they get sick on the job. It’s not required in Texas, but about every small business should get it. (Without it, you and your business will be on the hook to pay the cost of medical bills—or lawsuits—that happen.)

If you go with Huckleberry’s quick workers’ comp estimator, this step shouldn’t take too long—most businesses can get covered in about 5 minutes because everything is online and automatic. (If you go the traditional route with another insurer, though, be sure to set aside a few weeks. The paperwork can take a while.)

Another coverage to consider: Employment Practices Liability Insurance (EPLI). It protects your business if you’re ever sued for some kind of unfair employment practice (such as discrimination or harassment). It’s not required, but it can provide some peace of mind—especially if you don’t have an employment lawyer on tap for go-to legal advice.

Also, if you haven’t purchased Texas general liability coverage or a Business Owner’s Policy—now is as good a time as any. (Most small businesses need one or the other.)

6. Prepare for payroll

Paying your employee isn’t as simple as just writing a check. You’ll need to pay your employee on a state-mandated schedule, manage all their deductions accurately, and keep excellent, long-term records of every pay-related transaction. Set up a payroll service, such as Quickbooks, Gusto, or Paychex, to do all this efficiently.

A payroll service is an extra expense, yes, but it’s pretty affordable, and it will save you a lot of time and frustration. (Trust us: Don’t try to run your payroll from a spreadsheet. It’s not worth it.)

Part 2: How to hire employees in Texas

Okay, you’ve completed your preparation. Now, let’s look at the actual hiring process—step by step.

1. Write and post a job description

This is a big one. To attract the correct applicant for your business, you’ll need to do 2 things:

Craft your job description—carefully

Think of the job description you write as the first impression a prospective employee will have of your business. And first impressions matter—a lot.

So, make sure to describe your business in ways that would attract your ideal applicants. What does your business offer that your perfect employee would want? Put those aspects of the job front and center in your job description. If you want an employee who thrives outdoors, highlight the opportunity to work outside in the fresh air. If your ideal employee is ambitious, mention the opportunities to learn new skills and take on leadership roles.

If you get stuck, take a look at other job descriptions in your field and ask yourself how you can distinguish your business.

Get the word out about your job

Look up how applicants find jobs in your area. Many small business owners post their jobs online, which is a great place to start. Creativity can go a long way toward finding the perfect applicant. Call the local colleges and technical schools to post your job at their career centers. Put job flyers where people in the ideal demographic tend to congregate.

Finally, don’t forget the old-fashioned way: word-of-mouth. Send the job description around to friends and family members to see if they know any qualified applicants. (Disclaimer: Hiring someone you know personally can have its drawbacks.)

2. Choose and interview your top applicants

The process of interviewing and hiring could fill a book on its own, so we’ll simply offer this advice: When you’ve found a qualified applicant for the job and are considering making the hire, ask yourself whether this is a person you’ll enjoy being around. (You’ll be spending a lot of time together.)

Need a bit more guidance? We recommend this quick guide to the interview process.

3. Hire and onboard your new employee

Once you find someone amazing for the job, it’s time to fill out all the paperwork. Here’s a list of the new hire forms in Texas that your employee will need to sign.  

• The official offer letter. You need a signed copy for your records.
• An Employee Personal Data Form. This is where you collect information such as name, date of birth, and physical address.
• A W2 Tax Form
• The I-9 Form, which proves their right to work in the United States. You’ll also need to collect one of the documents on this list. (Copies won’t work for this requirement, either. You’ll need to inspect the document they provide physically.)
• A Direct Deposit Authorization Form
• A Federal W-4 Form
• Company Workers’ Compensation Insurance Policy Forms
• Company Health Insurance Policy Forms
• Disability Self-Identification Form. This is only required if your company does business with the government.
• Consent to Background Check if you plan to run one on your prospective employee.
• Your company’s Non-Disclosure Agreement (if you have one)

Next, here are all the posters you’re legally required to print and display:

• Equal Employment Opportunity Act/Americans With Disabilities Act of 1990
• Employee Polygraph Protection Act (EPPA)
• Employer's Notification of the Ombudsman Program to Employees (ENOPE)
• Fair Labor Standards Act (FLSA)
• Family Medical Leave Act (FMLA)
• Job Safety and Health Protection Posters (OSHA)
• Migrant and Seasonal Agricultural Worker Protection Act (MSPA)
• Texas Payday Law (English or Spanish)
• Uniformed Services Employment and Reemployment Rights Act (USERRA)
• Workers Compensation Posters  (English or Spanish)
• Notice No. 5 (If you’ve elected to skip workers’ comp coverage—not recommended.)
• Notice No. 6

4. Report your hire with the State of Texas

You’ve almost made it! The final step in this process is to report your hire. You’ll need to make the report within 20 calendar days of the hire—if you don’t, your business could get slapped with a fine.

Here’s what you’ll need to include in the report:

• The name of your business
• Your business address
• Your federal tax ID number
• Employee’s name
• Employee’s Social Security Number
• Employee’s address
• Your employee’s first day of work

(For complete information on how to report new hires in Texas, visit the Texas new hire reporting laws website.)

While hiring your new employee may involve a lot of paperwork, getting workers’ comp doesn’t have to. You can get a workers’ comp estimate online in about 5 minutes. Whether in Austin, Dallas, Lubbock, or El Paso, get the most affordable coverage that fits your business and payroll.