How do I hire my first employee?

How to Hire Your First Employee in North Carolina

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

Step 1: Register Your Business for Employment

• Register with the North Carolina Department of Revenue (NCDOR): Obtain an employer withholding account to handle state income tax withholding from employee wages.
• Register for Unemployment Insurance: Sign up with the North Carolina Division of Employment Security (DES) to pay state unemployment insurance taxes.
• Obtain a Federal Employer Identification Number (EIN): If you haven’t already, get an EIN from the IRS to use on tax forms and payroll.

Step 2: Understand Employee Classification

Correctly classify your worker as an employee or independent contractor. Misclassification can lead to penalties and tax issues. Employees require payroll taxes, benefits administration, and compliance with labor laws.

Step 3: Set Up Payroll and Tax Withholding

• Implement Payroll Systems: Use payroll software or services to calculate wages, withhold federal and state taxes, and manage deductions.
• File Form W-4: Have your employee complete this form to determine federal income tax withholding.
• File Form NC-4: Have your employee complete this form for North Carolina state tax withholding.
• Report New Hire: Submit new hire reports to the North Carolina New Hire Reporting Center within 20 days of hiring.

Step 4: Comply with Employment Laws and Insurance

• Workers’ Compensation Insurance: North Carolina requires most employers to carry workers’ compensation insurance to cover workplace injuries.
• Post Required Notices: Display labor law posters in your workplace as mandated by federal and state law.
• Verify Work Eligibility: Complete Form I-9 for employment eligibility verification and retain it on file.

Step 5: Maintain Employee Records and Reporting

• Keep Accurate Records: Maintain payroll records, tax filings, and employment documents for at least four years.
• File Employment Taxes: Regularly deposit federal and state payroll taxes and file quarterly reports as required.

As of 2026, staying current with North Carolina's employment regulations and tax requirements will help you avoid penalties and build a compliant foundation as you grow your workforce.