Do I need a permit to hire employees?

Hiring Employees in California: Permit and Licensing Requirements

In California, you do not need a specific permit solely to hire employees. However, there are important registration and compliance steps required before and after hiring staff.

Key Operational Steps Before Hiring Employees

• Register Your Business: Ensure your business is properly registered with the California Secretary of State if applicable to your business structure (e.g., corporation, LLC).
• Obtain an Employer Identification Number (EIN): Register with the IRS to get an EIN, which is required for payroll and tax reporting.
• Register with California Employment Development Department (EDD): You must register as an employer with the EDD to handle state payroll taxes, unemployment insurance, and disability insurance.
• Workers' Compensation Insurance: California law requires employers with one or more employees to carry workers' compensation insurance before starting work.

Ongoing Compliance and Reporting

• Payroll Tax Withholding: Set up systems to withhold and remit federal and state payroll taxes, including income tax, Social Security, Medicare, and California SDI.
• Employee Classification: Correctly classify workers as employees or independent contractors to avoid penalties and ensure proper tax treatment.
• New Hire Reporting: Report newly hired or rehired employees to the California New Employee Registry within 20 days of their start date.
• Maintain Employment Records: Keep accurate records of hours worked, wages paid, and other employment details as required by California labor laws.

As of 2026, these operational steps are essential to legally hire employees in California. While no special hiring permit is needed, compliance with registration, insurance, and reporting requirements is mandatory to operate smoothly and avoid fines.