Hiring first employee — minimum paperwork needed?

Solo founder, about to hire my first W-2 employee. Completely overwhelmed by all the requirements. What's the minimum paperwork I actually need before their start date? Based in Delaware but employee is in California.

Minimum requirements for hiring in California (one of the strictest states):

Before start date:
- Offer letter (at-will statement, salary, start date)
- Get EIN from IRS if you don't have one
- Register as employer with CA EDD
- Get workers' comp insurance (required in CA)

On/before first day:
- W-4 (federal tax withholding)
- I-9 (employment eligibility, keep Section 2 within 3 days)
- DE 4 (CA state tax withholding)
- New hire report to CA within 20 days

honestly just use Gusto or Rippling. they handle all of this for you — federal/state registration, W-4, I-9, new hire reporting, workers comp, payroll taxes. $40-80/month per employee. worth it to not mess up compliance

California employee = California problems. You'll need to comply with CA law even though your company is in Delaware. This includes: meal/rest break requirements, overtime after 8 hours/day (not just 40/week), sick leave, and a bunch of mandatory notices.

This is terrifying. What about an employment agreement? Do I need one or is offer letter enough?

Offer letter is legally sufficient but I recommend a short employment agreement that covers:
- At-will employment (important!)
- IP assignment (anything they create belongs to company)
- Confidentiality
- Non-solicitation (if not CA resident — CA bans non-competes but non-solicits are gray area)

Templates exist online but worth having an employment lawyer review, especially for CA. Maybe $500-1000.

UPDATE: Signed up for Gusto, they walked me through everything. CA registration took about a week to process. Employee starts Monday with all paperwork sorted. Total cost: $79/month + ~$800 for employment agreement review. Peace of mind is worth it.

This thread is so helpful - bookmarking for when I hire my first employee (hopefully soon!). Quick question tho - is Gusto still the recommendation in 2026? Ive heard Rippling might be better for startups planning to scale?

@AnotherSoloFounder - Rippling has more features but is also more expensive and more complex. For your first 1-5 employees Gusto is still probably the easiest. You can always switch later when you outgrow it.

The key is just picking something and not trying to DIY payroll and compliance. Thats where people get in trouble.

One year update: Still using Gusto and its been great. Employee #1 worked out and Ive since hired #2 and #3 (both also in CA unfortunately lol). The platform scales fine for a small team.

Biggest lesson: the $800 I spent on the employment agreement review was 100% worth it. Had a minor dispute with an employee about IP ownership and having airtight contracts made it a non-issue. Dont skimp on the legal stuff upfront.