What should businesses do before hiring their first employee?

Steps Ohio Businesses Should Take Before Hiring Their First Employee

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

Register Your Business and Obtain an EIN

• Register your business with the Ohio Secretary of State if not already done. This establishes your business as a legal entity eligible to hire employees.
• Apply for an Employer Identification Number (EIN) from the IRS. This number is required for tax reporting and payroll processing.

Set Up Ohio Employer Accounts

• Register with the Ohio Department of Taxation to handle state income tax withholding.
• Register for Ohio Unemployment Insurance (UI)

Prepare for Payroll and Tax Compliance

• Establish a payroll system that calculates and withholds federal and state taxes, including Social Security, Medicare, and Ohio state income tax.
• Understand employee classification to correctly categorize workers as employees or independent contractors, which affects tax and reporting obligations.

Develop Hiring and Recordkeeping Processes

• Create clear job descriptions and employment agreements to set expectations and document roles.
• Prepare for compliance with federal and state labor laws, including minimum wage and workplace safety requirements.
• Set up a system for maintaining employee records, such as I-9 forms, W-4 forms, and payroll documents, as required by Ohio and federal regulations.

Consider Insurance and Benefits

• Obtain workers' compensation insurance as mandated for Ohio employers to cover workplace injuries.
• Evaluate other insurance needs such as unemployment insurance and liability coverage.

As of 2026, staying current with Ohio's employment regulations and tax requirements is critical for smooth business operations when hiring employees.