Things to Consider Before Hiring Employees in Florida

Hiring your first employee is a major milestone for any growing business. It also comes with legal, financial, and administrative responsibilities that many new employers don’t anticipate. Before you bring someone onto payroll, here are the key factors every Florida business should evaluate.

Understanding the Difference Between Contractors and Employees

Correctly classifying your workers is one of the most important decisions you’ll make. Misclassification can lead to back taxes, penalties, and legal issues — especially for businesses working with federal or state contracts.

Employee Classification

Employees work under your direction and control. You determine their schedule, how the work is performed, and provide tools/equipment. Employees must be paid through payroll, with taxes withheld.

Contractor Classification

Independent contractors control how they perform their work. They typically use their own tools, set their own hours, and invoice you for services. You do not withhold taxes for contractors.

Key Differences to Consider

• Tax obligations: Employers must withhold federal income tax, Social Security, and Medicare for employees — not contractors.

• Benefits: Employees may be eligible for benefits such as PTO, workers’ comp, and unemployment insurance. Contractors are not.

• Control: The more control you exert over how work is done, the more likely the worker is legally an employee.

• Risk: Misclassification can trigger IRS audits, Florida Department of Revenue penalties, and federal contractor compliance issues.

If you’re unsure, the IRS provides a three‑factor test: behavioral control, financial control, and relationship type.

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Tax Responsibilities When Hiring Employees

Once you decide to hire an employee, your tax responsibilities change significantly.

Federal Payroll Taxes

You must withhold and remit:

• Federal income tax

• Social Security (6.2% employer share)

• Medicare (1.45% employer share)

• FUTA (Federal Unemployment Tax Act)

You’ll also need an EIN (Employer Identification Number) if you don’t already have one.

State Payroll Taxes

Florida does not have state income tax, but it does require employers to pay Reemployment Tax (formerly Unemployment Tax).

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Registering for Florida Reemployment Tax

Florida requires employers to register for Reemployment Tax as soon as they hire employees. This tax funds unemployment benefits for workers who lose their jobs.

Who Must Register

You must register if:

• You pay $1,500 or more in wages in a calendar quarter, or

• You have one or more employees for any part of a day during 20 different weeks in a calendar year.

How to Register

You register through the Florida Department of Revenue using Form RT‑6 or online through the DOR portal.

What You’ll Pay

The standard rate for new employers is 2.7% on the first $7,000 of each employee’s wages. Rates may adjust over time based on your company’s experience.

Ongoing Requirements

• File quarterly RT‑6 reports

• Pay reemployment tax each quarter

• Maintain accurate payroll records

• Report new hires to the Florida New Hire Reporting Center

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Other Considerations Before Hiring

Workers’ Compensation

Florida requires workers’ comp coverage depending on your industry and number of employees.

Employee Handbook

Even small teams benefit from clear policies on conduct, PTO, safety, and expectations.

Onboarding Process

Set up a structured onboarding process including I‑9 verification, W‑4 completion, direct deposit setup, and required training.

Payroll System

Choose a payroll provider that handles tax withholding, reporting, and compliance.

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Final Thoughts

Hiring employees is a strategic step that can help your business grow — but it comes with responsibilities that can be daunting at first. Give us a call for a free consultation and we can help point you in the right direction.