So I finally took the plunge and formed a Massachusetts LLC last year for my small woodworking business. Things picked up faster than I expected and I need to bring on one part-time person to help with sanding, finishing, and some light shop tasks. I have zero experience with payroll, workers comp, or any of the legal stuff. What's the actual first step here? Do I need an EIN first, or can I just start paying someone and figure it out later?
Hiring
I started a Massachusetts LLC and now need to hire my first employee
EIN before anything else. You'll need it for payroll and for filing the federal quarterly stuff. Also, Massachusetts requires you to register as an employer with the Department of Unemployment Assistance (DUA) once you pay someone $200 or more in a calendAr quarter. It's not optional.
Wait, $200? That's wild. I thought it was way higher.
Nope. $200 in a quarter and you're on the hook. The DUA site is clunky but the registration itself is free. Workers comp is the bigger headache though — MA requires it for basically any employee, even part-time. You can get a policy through a broker, but don't skip it. The fines are no joke
Honestly, for one part-time employee, just use a payroll service. Gusto or whatever. They handle the DUA registration prompts, tax withholding, all of it. I tried doing it manually my first year and wanted to throw my laptop out the window.
This is already more than I knew. So EIN, then DUA, then workers comp, then payroll service? That order roughly right?
Roughly, yeah. But before you even post the job, figure out if they're an employee or a contractor. If you're telling them when to show up and what to sand, they're an employee. Misclassification in MA is a whole thing. The Attorney General actually cares about it.
Second the classification point. Also — and I know this sounds obvious — get a written offer letter that states pay rate, schedule, and that it's part-time. Doesn't need to be fancy. Just something both of you sign. Saved me a headache when a guy tried to claim he was full-time after three months.
One more thing nobody mentioned: the Massachusetts Paid Family and Medical Leave (PFML) contributions. You'll have to withhold and remit those once you have an employee. Payroll software handles it, but be aware it's a line item.
And if the person is under 18, there are extra rules about hours and machinery. Probably not your situation but worth a glance if you hire a shop kid.