What should businesses do before hiring their first employee?

Preparing to Hire Your First Employee in Arkansas

Before hiring your first employee in Arkansas, it's important to complete several key operational steps to ensure compliance and smooth onboarding.

Register Your Business for Employment

• Obtain an Employer Identification Number (EIN): Apply for an EIN from the IRS to use for payroll and tax reporting.
• Register with the Arkansas Department of Finance and Administration: Set up an account for state payroll tax withholding and unemployment insurance reporting.

Understand Arkansas Employment Laws

• Employee Classification: Determine if your worker is an employee or independent contractor to ensure proper tax withholding and benefits.
• Minimum Wage and Overtime: Comply with Arkansas state minimum wage laws and federal overtime requirements.

Set Up Payroll and Recordkeeping Systems

• Choose a Payroll System: Implement payroll software or a service that handles tax withholdings, payments, and reporting.
• Maintain Employee Records: Keep accurate records of hours worked, wages paid, and tax documents as required by Arkansas and federal law.

Prepare for Hiring and Compliance

• Complete New Hire Reporting: Report new hires to the Arkansas New Hire Reporting Center within 20 days of employment.
• Verify Work Eligibility: Use the federal Form I-9 process to confirm employee eligibility to work in the U.S.
• Obtain Workers’ Compensation Insurance: Arkansas requires employers to carry workers’ compensation coverage for employees.

As of 2026, staying updated with Arkansas labor regulations and tax requirements will help you manage hiring efficiently and avoid compliance issues.