How to hire your first employee in Texas
Ready to add an employee to your team? Congratulations! We’ve put together what you’ll need to know to make your first hire efficiently (and legally). In Part 1, we’ll talk about how to prepare for making the hire, and in Part 2, we’ll talk about the actual hiring process (and what paperwork you’ll need for your new 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
- 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 do 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. Remember that it will take time to get your hiring paperwork in order, finalize your new insurance coverages, and get your business ready for an employee. Be sure to include the time it will take to find applicants, gather and sort their application materials, and do any interviews. You should 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.) 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 Texas 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 3-4 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 on 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 insurance is coverage that protects your employee in case they ever get sick or hurt on the job. It’s not technically required in Texas, but just about every small business should get it anyway. (Without it, you and your business will be on the hook to pay the cost of any medical bills—or lawsuits—that happen because of a workplace injury. And that could get pretty expensive.)
If you go with Huckleberry, 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 in case 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 retainer to take care of any legal threats.
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. To do all this efficiently, it’s best to set up a payroll service, such as Quickbooks, Gusto, or Paychex.
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 two 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 your ideal applicants would be attracted to. 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 in the 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
Next, do a bit of detective work to find out how applicants find jobs in your area. Many small business owners post their job online, and that’s certainly a great place to start. But don’t stop there. A little bit of 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. (Be careful, though: hiring someone you know personally has its own set of 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 physically inspect the document they provide.)
- 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
- The date your employee started paid work
(For complete information on how to report new hires in Texas, visit the Texas new hire reporting laws website.)
Okay, that’s it. We hope this was helpful. Remember—while hiring your new employee may involve a lot of paperwork, getting workers’ comp doesn’t have to. In fact, you can get a workers’ comp estimate online in about 5 minutes—less time than it takes to make a cup of coffee.