How do I hire my first employee?

How to Hire Your First Employee in Maryland

Hiring your first employee in Maryland involves several operational steps to ensure compliance and smooth onboarding. Follow this practical guide to get started efficiently.

1. Register Your Business for Employment

• Obtain an Employer Identification Number (EIN): Get your EIN from the IRS for tax reporting purposes.
• Register with Maryland's Department of Labor: Sign up for employer accounts related to unemployment insurance and withholding taxes.

2. Understand Maryland Employment Requirements

• Verify Work Eligibility: Complete Form I-9 for each new hire to confirm legal work authorization.
• Employee Classification: Classify workers correctly as employees or independent contractors to avoid compliance issues.
• Minimum Wage and Overtime: Comply with Maryland’s minimum wage laws and overtime rules, which may differ from federal standards.

3. Set Up Payroll and Tax Withholding

• Register for Maryland Withholding Tax: Withhold state income taxes from employee wages and remit them to the Maryland Comptroller’s Office.
• Federal Payroll Taxes: Withhold Social Security, Medicare, and federal income taxes, and file required reports with the IRS.
• Consider Payroll Automation: Use payroll software or services to manage calculations, tax filings, and payments efficiently.

4. Obtain Required Insurance

• Workers’ Compensation Insurance: Maryland requires most employers to carry workers’ compensation coverage for employee injuries.
• Unemployment Insurance: Register and contribute to Maryland’s unemployment insurance program.

5. Maintain Proper Recordkeeping

• Employee Records: Keep records of hiring documents, tax forms, payroll records, and work eligibility verification.
• Reporting Requirements: Submit new hire reports to the Maryland New Hire Registry within 20 days of hiring.

6. Prepare for Compliance and Workplace Policies

• Employee Handbook: Develop clear workplace policies covering attendance, conduct, and benefits.
• Post Required Notices: Display Maryland and federal labor law posters in the workplace.

As of 2026, staying current with Maryland’s employment regulations and automating payroll and recordkeeping processes can help streamline hiring and reduce operational risks.