How do I hire my first employee?

How to Hire Your First Employee in Vermont

Hiring your first employee in Vermont involves several operational steps to ensure compliance and smooth business functioning. Below is a practical guide to help you through the process.

Step 1: Register Your Business for Employer Purposes

• Obtain an Employer Identification Number (EIN): Apply for an EIN from the IRS, which is necessary for payroll and tax reporting.
• Register with Vermont Department of Labor: You must register as an employer to handle unemployment insurance and payroll taxes.

Step 2: Understand Vermont Employment Requirements

• Verify Work Eligibility: Complete Form I-9 for your new hire to confirm their legal right to work in the U.S.
• Employee Classification: Correctly classify your worker as an employee or independent contractor to avoid compliance issues.

Step 3: Set Up Payroll and Tax Withholding

• Register for Vermont State Payroll Tax: You need to withhold state income tax and contribute to unemployment insurance.
• Set Up Payroll System: Implement payroll software or services that automate tax calculations, withholdings, and recordkeeping.

Step 4: Comply with Vermont Labor Laws

• Minimum Wage and Overtime: Ensure compliance with Vermont’s wage and hour laws, including the state minimum wage and overtime rules.
• Workers’ Compensation Insurance: Obtain workers’ compensation coverage as required for your employees.
• Employee Notices and Posters: Display all mandatory labor law posters in the workplace.

Step 5: Maintain Proper Recordkeeping

• Keep Employment Records: Maintain records of hiring documents, tax forms, wages, and hours worked according to Vermont and federal guidelines.
• Reporting Requirements: File necessary reports such as quarterly payroll tax returns and annual unemployment insurance reports.

As of 2026, these steps reflect Vermont’s operational requirements for hiring your first employee. Staying organized and compliant will support your business growth and reduce potential risks.