How to Hire Employees in Texas - A Guide for Employers

Hiring your first employee in Texas is where your business shifts from a personal effort to a growing enterprise. It marks the beginning of a team, a shared mission, and a new level of responsibility.

Texas offers a welcoming environment for business owners, but hiring is not as simple as making an offer and signing a contract. You must follow a clear process that includes tax registration, payroll setup, legal compliance, and proper reporting to the state.

This guide gives you the full picture. Whether you are building your first team or stepping into the role of employer for the first time, you will find exactly what you need to move forward with confidence. Every step matters, and we are here to make each one easier to take.

What Employers Need to Know Before Hiring in Texas

Hiring your first employee in Texas is an exciting milestone, but it also introduces a new set of legal, financial, and administrative responsibilities. Before you begin interviews or extend offers, there are key foundations every employer must understand.

Start by Defining the Role Correctly

Before anything else, determine whether you are hiring an employee or working with an independent contractor. This decision affects everything from payroll taxes to legal liability. Misclassifying workers is a common mistake that can lead to audits, fines, and serious consequences.

If you are unsure how to classify the role, consult this contractor misclassification guide. It explains how to avoid one of the most frequent errors new employers make.

Obtain an Employer Identification Number (EIN)

To hire legally, you need an Employer Identification Number from the IRS. This number is required to report wages, file taxes, and complete employee documents. You can request one online directly through the IRS, and most businesses receive it immediately.

Register with the Texas Workforce Commission

All Texas employers must register with the Texas Workforce Commission before hiring. This allows you to report new employees and pay state unemployment tax. It is a necessary step whether you are hiring one person or building an entire team.

Understand Employment Laws That Apply to You

While Texas does not have a state income tax, you are still responsible for federal employment taxes, including Social Security, Medicare, and federal unemployment. Employers must also comply with wage laws, anti-discrimination rules, and eligibility verification requirements under federal law.

If your new hire lives in another state, or if your team is remote, you may also be subject to other state-specific regulations. In this case, working with a contractor of record can help you stay compliant without creating a new legal entity in each state. This simplifies the process and ensures that your team is properly managed, no matter where they are located.

How to Onboard Your First Employee in Texas the Right Way

Hiring is only the beginning. Once your new employee accepts the offer, a clear and compliant onboarding process is essential. It ensures your business meets legal requirements and gives your new hire a confident and professional start.

Build a Structured Onboarding Plan

Effective onboarding begins before day one. Prepare a step-by-step plan that includes introductions to team members, training sessions, tools they will use, and key milestones for the first few weeks. This approach helps reduce confusion and sets clear expectations from the start.

The goal is not just to complete paperwork, but to create a smooth transition into your company culture and workflow.

Complete All Required Documents

Texas employers must collect and submit specific forms when hiring a new employee. These include:

• Form W-4 for federal income tax withholding

• Form I-9 along with proper identification to verify employment eligibility

• The employee’s Social Security number and contact information for payroll setup

You are also required to report the new hire to the Texas Workforce Commission within 20 calendar days of their official start date. Failing to do so can result in penalties and compliance issues.

Provide an Employee Handbook and Company Policies

Although not required by law, an employee handbook is a valuable tool. It communicates your workplace policies, employee rights, behavioral expectations, and procedures for things like leave, time tracking, performance reviews, and communication.

A well-written handbook helps protect your business, creates consistency, and reduces misunderstandings between employers and employees.

Support a Smooth Transition into the Role

Beyond the paperwork, onboarding is about setting your employee up for long-term success. Make sure they have access to the systems, equipment, and tools they need. Offer clear guidance during the first week, check in regularly, and answer questions proactively.

If you are hiring a remote or out-of-state team member, Rivermate’s Contractor of Record service can help you onboard talent quickly and compliantly without setting up a new legal entity.

For more details on building your workforce legally and efficiently, explore this complete hiring guide for employers in the United States. It offers valuable insights to help you stay compliant across multiple states and understand broader employment obligations.

Whether you are building a local team or working with someone remotely, onboarding is your first opportunity to lead well. Treat it as more than a formality. It is the beginning of your company’s next chapter.

How to Set Up Payroll for New Employees in Texas

Setting up payroll is one of the most important steps in becoming an employer. It ensures your team is paid accurately and on time, and it keeps your business in compliance with state and federal tax regulations. In Texas, the process is straightforward once you know what to do but skipping any step can lead to penalties, delays, or legal issues.

Understand Your Payroll Responsibilities as a Texas Employer

Once you have your EIN, you can begin setting up payroll. This includes:

• Withholding the correct amount of federal income tax from employee wages

• Paying the employer’s share of Social Security and Medicare taxes under FICA

• Submitting federal unemployment taxes under FUTA

• Paying state unemployment tax to the Texas Workforce Commission

Even though Texas does not have a state income tax, you are still responsible for withholding and paying all required federal taxes. You will also need to track employee hours, calculate gross and net pay, issue pay stubs, and maintain records in case of audits.

Payroll must be managed accurately and consistently. Many small business owners choose to work with professionals or software to avoid errors and ensure they are meeting all requirements.

Hiring Out of State Employees: What Texas Employers Need to Know

Hiring remote employees outside of Texas gives you access to a wider talent pool, but it also comes with new responsibilities. Every state has its own employment laws, tax rules, and reporting requirements. As the employer, it is your job to stay compliant.

If your team includes remote contractors or workers across multiple states, it is important to understand the federal guidelines. You can review the Department of Labor’s classification rules to better understand your obligations as an employer.

P.S. Also check out our guide on how to hire employees in California

Understand State Specific Obligations

When hiring someone in another state, you may need to register your business there, follow that state’s wage laws, and provide required benefits. These rules apply as soon as the employee begins work, so it is important to prepare in advance.

Manage Payroll Across State Lines

You may need to withhold state income tax, contribute to unemployment insurance in the employee’s state, and follow separate payroll schedules. Even small mistakes can lead to compliance issues, so stay organized and informed.

Support Remote Teams Effectively

Once hired, remote employees need the same clarity and support as in-office staff. Establish clear communication, provide access to the right tools, and define expectations early. With the right structure, hiring out of state can be both compliant and highly effective.

Ready to Hire Your First Employee in Texas? Start Strong

Hiring your first employee is more than a milestone. It is a turning point in the life of your business. The way you approach this step can shape everything that follows, from your team’s culture to your long-term growth. It is not just about filling a role. It is about building something that lasts.

If you want to start strong and stay compliant at every stage, Rivermate is here to support you. Whether you are hiring in Texas or expanding your team across state lines, our platform helps you manage employment, compliance, and onboarding with clarity and confidence.

Texas is known for welcoming businesses, but that does not mean employers can skip the details. From tax registration and payroll setup to onboarding and reporting, every requirement plays a part in protecting your business and supporting your team. The good news is that you do not have to figure it all out on your own.

Use this guide as your starting point. Stay informed, stay organized, and treat every hire as an opportunity to lead better. Your business deserves a solid foundation, and your employees deserve a professional and thoughtful start.

Contact Rivermate today and take the next step with confidence. We are here to help you grow, the right way, from the very beginning.