The Contractor's Checklist for Hiring Your First Employee

Hiring your first employee is one of the most exciting — and terrifying — things you'll do as a contractor. You've been running solo (or with a sub here and there), and now you're officially becoming a company.

Most contractors get the trade part right. They hire someone who knows the work. Where things fall apart is everything that comes before the first day on the job — the paperwork, the legal requirements, the onboarding systems. Skip those and you're one audit, one workers' comp claim, or one bad hire away from a serious headache.

Here's the checklist I built from seven years of running a plumbing company. Use it every time you bring someone on.

Before You Post the Job

Decide: employee or subcontractor? The IRS has specific rules about this. Employees work your hours, use your tools, follow your process. Subs set their own schedule and work for multiple clients. Misclassifying an employee as a sub can result in back taxes and penalties.

Get your EIN if you don't already have one. You'll need it for payroll taxes. Takes about 5 minutes at IRS.gov.

Register with your state's labor department. Most states require employers to register before making their first hire.

Set up a payroll system. For most small contractors, Patriot Software (affiliate) is the best value — it runs payroll, files and pays taxes, handles direct deposit, and pays 1099 subs without the enterprise price tag. If you also want benefits and HR tools in one place, Gusto is a solid pick. Already running QuickBooks Online? QuickBooks Payroll keeps everything under one login. Don't try to do payroll manually.

Get workers' compensation insurance. Required in almost every state as soon as you have one employee. Call your insurance agent before you post the job — not after.

Check if you need to update your general liability policy. Adding employees often changes your premium.

Write a clear job description. Include the role, pay range, expected hours, physical requirements, and whether a clean driving record or background check is required.

When You Find the Right Person

Make a written offer. Even a simple one-page offer letter protects both of you. Include: start date, pay rate (hourly or salary), schedule, and any conditions (drug test, background check, license verification).

Collect a completed W-4 (federal tax withholding).

Collect a completed I-9 (identity and work authorization). You must verify original documents in person — copies don't count.

Run a background check if your work takes employees into customers' homes. This is table stakes for trust.

Pull a Motor Vehicle Report (MVR) if they'll be driving a company vehicle.

Order a drug test if required by your insurance or your clients.

Add them to payroll before their first day.

Add them to your workers' comp policy.

Order uniforms, business cards, and any branded gear.

Before Day One

Assign a vehicle (if applicable) and make sure it's insured for them specifically.

Issue a fuel card and set a spending limit.

Stock the truck with the standard inventory they'll need for their first week.

Set up their email and any software access (CRM, scheduling app, time tracking).

Create a 90-day onboarding plan. What will they learn in week 1? Month 1? By day 90?

Prepare a written SOP for the top 3–5 tasks they'll do every day.

Day One

Walk them through your service process start to finish — how a job goes from call to completion.

Introduce them to your CRM and scheduling system.

Review your customer service expectations (how to answer the phone, how to talk to homeowners, how to handle complaints).

Go over your invoicing process — when to collect payment, how to handle checks vs. cards.

Shadow them on their first 2–3 jobs. Don't just send them out alone.

Review safety protocols specific to your trade.

First 90 Days

Week 2: Check in on how calls and jobs are going. Address anything they're struggling with early.

Month 1: Review their work quality and customer feedback. Are they following the process?

Day 60: Have a formal check-in. What's going well? What do they need more support on?

Day 90: Conduct a 90-day review. Discuss pay, expectations, and growth path.

A Note on Culture

Your first hire sets the tone for every hire after them. If you let standards slip early — showing up late, cutting corners on paperwork, ignoring your process — that becomes the culture. The best time to establish expectations is before the first day, not six months in when bad habits are baked in.

Document everything. If you expect them to call customers back within two hours, write it down. If you expect trucks to be clean at the end of every day, write it down. Systems aren't about micromanaging — they're about clarity.

Free Download: 90-Day Employee Onboarding Plan

Grab the printable 90-Day Employee Onboarding Plan (PDF) — a step-by-step checklist covering setup week, Day 1, Weeks 2–4, the 30/60/90-day check-ins, and the formal 90-day review. Print it, hand it to your manager, and check off each task as you go.

Templates That Help

The Operations Manual Bundle includes the New Hire Checklist and technician training manual — the same before/during/after hiring process I used to bring people on cleanly.

The Office Manager Toolkit includes the Employee File Checklist and payroll tracking spreadsheets so your office stays organized as you grow.

Katie Ritter spent seven years running operations at a plumbing company, including hiring, onboarding, and HR systems. Ritter & Co. provides back-office support and templates for service trade contractors who are ready to stop doing it all from memory.