Here is what Missouri law requires you to do
Hiring your first employee is one of the most exciting milestones in a small business journey. It is also one of the most legally complex. Here is your plain-English step-by-step guide.
First: Celebrate — Then Get Serious
Bringing on your first hire is a sign your business is working. But it also means you are now an employer, and that comes with legal obligations most new business owners are not fully prepared for.
The good news: these requirements are manageable. You just need to know what they are and do them in the right order. Here is the complete checklist.
Step 1: Get Your EIN (If You Do Not Already Have One)
An Employer Identification Number (EIN) is your business’s tax ID number, issued by the IRS. You need one to hire employees, open a business bank account, and file most business tax forms. If you have been operating as a sole proprietor using your Social Security Number, now is the time to get an EIN.
The good news: getting an EIN is free and takes about 15 minutes on the IRS website. Apply at irs.gov and you will receive your EIN immediately. Do this first — you need it for almost everything else on this list.
Step 2: Register as an Employer with Missouri
Missouri requires new employers to register with the Missouri Department of Revenue for state income tax withholding and with the Missouri Division of Employment Security for unemployment insurance tax. Both registrations can be done online.
You will also need to report your new hire to Missouri’s New Hire Reporting Program within 20 days of their start date. This is a federal requirement administered at the state level and is easy to overlook. Failing to report carries fines.
Step 3: Understand Employee vs. Independent Contractor
Before you make a hiring decision, you need to be clear on whether you are hiring an employee or engaging a contractor. This distinction matters enormously, and getting it wrong is one of the most expensive mistakes small businesses make.
The IRS uses a multi-factor test that looks at behavioral control, financial control, and the nature of the relationship. Generally speaking, if you control when, where, and how someone works; provide their tools and equipment; and they work exclusively or primarily for you — the IRS will likely classify them as an employee, regardless of what you call them or what your contract says.
Employee misclassification can result in back taxes, penalties, interest, and liability for unpaid benefits. If you are unsure which category your hire falls into, get legal advice before you bring them on.
Step 4: Write an Offer Letter
An offer letter is not legally required in Missouri, but it is strongly recommended. It creates a written record of exactly what was offered and accepted: job title, compensation, start date, schedule, benefits, and whether the position is at-will (meaning either party can end the relationship at any time for any lawful reason).
Important: avoid language in your offer letter that implies a guaranteed term of employment unless you actually mean it. Phrases like ‘permanent position’ or ‘long-term role’ can create unintended legal obligations. Keep it clear and use at-will language.
Step 5: Set Up Workers Compensation Insurance
Missouri law requires most employers to carry workers compensation insurance if they have five or more employees (certain industries require it with fewer). Even if you are not legally required to have it yet, it is wise to get coverage before your first hire. Workers comp covers medical expenses and lost wages if an employee is injured on the job. Without it, you could be personally liable for those costs.
Workers comp insurance is available through private insurers or through the Missouri State Employers Mutual Insurance (SEMI) program. Rates vary by industry and job type.
Step 6: Complete Required Employment Forms
Every new employee must complete two forms before they start work:
- Form I-9: This federal form verifies that your employee is authorized to work in the United States. You must complete it within three business days of the employee’s start date. You are required to physically examine identity and work authorization documents. Keep the completed I-9 on file; do not send it to the government.
- Form W-4: This IRS form tells you how much federal income tax to withhold from the employee’s paycheck. Missouri has its own version, the MO W-4, for state tax withholding. Make sure you have both.
Step 7: Set Up Payroll
Payroll is more than just writing a check. As an employer, you are required to withhold federal income tax, Social Security and Medicare taxes (FICA), Missouri state income tax, and any applicable local taxes. You must also pay the employer’s share of FICA taxes.
Most small businesses use payroll software like Gusto, QuickBooks Payroll, or ADP to handle this. These tools automate withholding calculations, tax deposits, and quarterly payroll tax filings. Trying to do payroll manually is risky and not worth the effort.
You will need to make federal tax deposits on a schedule determined by the IRS, file quarterly Form 941 federal payroll tax returns, and issue W-2 forms to employees by January 31 each year.
Step 8: Review Missouri Wage and Hour Laws
Missouri’s minimum wage is higher than the federal minimum wage and has been increasing annually under a 2018 ballot initiative. As of 2025, you should verify the current rate at dol.gov or with a Missouri employment attorney.
You also need to understand overtime requirements under the Fair Labor Standards Act. Generally, non-exempt employees must be paid 1.5 times their regular rate for any hours over 40 in a workweek. Not all employees are eligible for overtime — whether someone is exempt depends on their salary level and job duties, not just their title.
Step 9: Create an Employee Handbook (Highly Recommended)
Missouri does not require an employee handbook, but having one is one of the best risk management investments a small business can make. A good handbook covers your workplace policies, code of conduct, anti-harassment and discrimination policies, time-off procedures, and disciplinary processes.
Most importantly, a handbook that employees sign acknowledges that employment is at-will and that they have received and read the company policies. This documentation protects you significantly if a dispute arises later.
A Note on Anti-Discrimination Laws
Even with one employee, you are subject to certain anti-discrimination laws. Federal law (Title VII, ADA, ADEA) applies to employers with 15 or more employees for most protections. However, Missouri’s Human Rights Act covers employers with 6 or more employees. And regardless of size, it is always best practice to have clear non-discrimination policies and consistent hiring practices.
The Bottom Line
Hiring your first employee is a milestone worth celebrating. Just make sure you take the legal steps seriously. The requirements are not designed to be overwhelming — they exist to protect both you and the people who work for you.
At Voytas Law, we have guided St. Louis businesses through their first hire and their fiftieth. We know Missouri employment law inside and out, and we will make sure you get it right from day one.
LEGAL DISCLAIMER: This article is for educational purposes only and does not constitute legal advice. Every business situation is unique. Please consult with a qualified attorney before making legal decisions for your business.
READY TO TAKE THE NEXT STEP? Voytas Law has guided St. Louis businesses through their first hire and their fiftieth. Before you send that offer letter, let us do a quick legal review. It takes one hour and could save you a lawsuit. Visit voytaslaw.com to schedule.
