Hiring your first employee in the United States means doing a handful of things before or on the first day: getting an Employer Identification Number, completing Form I-9 to confirm the person can work in the US, collecting a Form W-4 for tax withholding, reporting the hire to your state, arranging workers’ compensation coverage and putting up the required workplace posters. In a café or food truck, you also need to understand the federal rules on tips. The steps below follow guidance from the SBA, the IRS and the Department of Labor. State rules add to these, so check with your state labor and tax agencies as well.
Key takeaways
- Get an EIN and set up payroll before the first paycheck.
- Every new hire completes Form I-9 and Form W-4; you keep the I-9 on file.
- Report new hires to your state’s new hire directory within the time your state sets.
- Workers’ compensation and other employee coverage are required, with details set by state law.
- Employers may not keep any part of employees’ tips, and managers may not share in tip pools.
Step 1: Decide what the role is
Before posting a job, write down what you need help with and when. Is it weekend service, early-morning baking, a second person on the truck, or cleaning and prep? A clear description helps you hire the right person and set fair expectations.
It also helps you check the numbers. Use your own sales and cost figures to see what the business can support, and revisit the projections in your food business plan. Think about your own workload too: hiring is often the point where owners can step back from the long hours described in our explainer on hospitality burnout.
Step 2: Set up as an employer
The SBA’s guide to hiring and managing employees sets out the core payroll steps, starting with getting an Employer Identification Number. You will use the EIN for payroll tax filings.
Next, decide how you will run payroll. Some owners use payroll software, others an accountant or payroll service. Whichever you choose, it needs to handle withholding, filings and records from the first pay period.
Step 3: Complete the paperwork for hiring your first employee
On or before the first day:
- Form I-9. The IRS page on hiring employees says all US employers must properly complete Form I-9 for every new hire, whether a citizen or noncitizen, to verify identity and authorization to work. The SBA notes that you keep the form on file rather than sending it to the government.
- Form W-4. The IRS says to ask all new employees for a signed Form W-4 when they start work, so you can withhold the right amount of federal income tax. If an employee does not provide one, the IRS says to withhold as if the employee is single.
- Name and Social Security number. The IRS says you need each employee’s name and Social Security number for Form W-2, and that an ITIN cannot be used in place of a Social Security number for employment.
- State forms. Many states have their own withholding forms and new hire requirements.
Step 4: Report the hire and arrange coverage
The SBA says employers must report new employees to the state’s new hire directory within the timeframe the state requires, giving within 20 days of the hire date as an example. Look up your state’s exact deadline.
Workers’ compensation is the other early task. The SBA describes it as required through a commercial carrier, on a self-insured basis or through a state program, depending on where you are. Our comparison of food business insurance types covers how employee coverage fits with the rest of your insurance.
Finally, the SBA notes that employers must display workplace posters explaining employee rights, and that the Department of Labor provides the federal posters free. States have their own posters too.
Step 5: Get tips right from the start
Cafés, counters and food trucks often receive tips, and federal law sets clear limits. The Department of Labor’s fact sheet on tipped employees under the FLSA explains that:
- An employer may not keep any part of employees’ tips, whether or not it takes a tip credit.
- Managers and supervisors may not share in tip pools, though a manager may keep tips received directly for service they personally and solely provided.
- A traditional tip pool is limited to employees who customarily and regularly receive tips. A pool that includes non-tipped staff such as cooks and dishwashers is allowed only if every worker is paid the full minimum wage in cash.
- Before taking a tip credit, an employer must inform tipped employees of specific information, and cannot take the credit without that notice.
- Where state and federal rules differ, the employer must follow the one more protective of employees.
| Tip question | What the DOL fact sheet says |
|---|---|
| Can the owner keep part of the tips? | No, not directly or through a pool |
| Can a supervisor join the tip pool? | No |
| Can kitchen staff share tips? | Yes, in a nontraditional pool, only if all are paid full minimum wage in cash |
| When must pooled tips be paid out? | By the regular payday, or as soon as practicable if amounts are not known in time |
| Which rules apply when state law differs? | Whichever is more protective of employees |
Write your tip policy down and share it before the first shift.
Step 6: Keep records and plan onboarding
The SBA says the IRS requires businesses to keep employment tax records for at least four years. Keep a folder for each employee with their forms, pay records and any training certificates.
Plan the first week as well: food safety basics, allergen procedures, cleaning routines, cash handling and how to ask for help. Check whether your state or city requires food handler training for new staff.
Frequently asked questions
Can I pay my first helper as a contractor instead?
Whether someone is an employee or a contractor depends on the working relationship, not the label you choose. A person working regular shifts under your direction in your café is likely to be treated as an employee. Check IRS and state guidance before deciding.
Do I need workers’ compensation for one part-time employee?
Rules are set by each state, and some include part-time staff from the first hire. Ask your state workers’ compensation agency or an insurance agent.
Can I split tips between front-of-house and kitchen staff?
Under the federal rules, yes, but only in a nontraditional pool where everyone receives the full minimum wage in cash, and never with managers or supervisors. State law may be stricter.
Before the first shift
Get your EIN and payroll in place, print the I-9 and W-4, find your state’s new hire reporting rules, arrange workers’ compensation and write your tip policy. Then spend the first week training rather than rushing. More operating guides are in our small cafés section.