What should businesses do before hiring their first employee?

Preparing to Hire Your First Employee in Maryland

Before hiring your first employee in Maryland, it is essential to complete several operational steps to ensure compliance and smooth onboarding.

Register Your Business and Obtain Necessary Identifiers

• Register Your Business: Confirm your business is properly registered with the Maryland Department of Assessments and Taxation.
• Apply for an Employer Identification Number (EIN): Obtain an EIN from the IRS, which is required for tax reporting and payroll.
• Register for Maryland State Taxes: Register with the Comptroller of Maryland for withholding tax and unemployment insurance tax accounts.

Understand Maryland Employment Laws and Compliance

• Employee Classification: Determine if your workers are employees or independent contractors to comply with payroll and tax obligations.
• Minimum Wage and Overtime: Ensure compliance with Maryland’s minimum wage and overtime regulations.
• Workplace Posters: Display required state and federal labor law posters in a visible location.

Set Up Payroll and Recordkeeping Systems

• Choose a Payroll System: Implement a payroll system to manage wage payments, tax withholdings, and reporting.
• Maintain Employee Records: Keep accurate records of employee information, hours worked, wages paid, and tax documents.

Obtain Required Insurance

• Workers’ Compensation Insurance: Secure workers’ compensation coverage as required for Maryland employers.
• Unemployment Insurance: Register and contribute to Maryland’s unemployment insurance program.

Prepare for Hiring and Onboarding

• Develop Job Descriptions: Create clear job descriptions to guide recruitment and set expectations.
• Complete Form I-9 and W-4: Collect necessary employment eligibility verification and tax withholding forms from your new hire.
• Implement Employee Handbook and Policies: Establish workplace policies covering attendance, conduct, and safety.

As of 2026, following these operational steps will help Maryland businesses efficiently hire their first employee while maintaining compliance with state and federal requirements.