Yes, a business operating under a DBA can have employees, but the DBA itself is not the employer. A “doing business as” name is only a registered trade name; the legal employer is you personally (if you are a sole proprietor) or the LLC or corporation behind the trade name. Every payroll tax filing, insurance policy, verification form, and labor law obligation attaches to that underlying person or entity, not to the name on the sign.
Who the Employer Actually Is
A DBA does not create a separate legal entity and provides no personal liability protection on its own.1U.S. Small Business Administration. Choose Your Business Name A sole proprietor using a DBA is still a sole proprietor. An LLC using a DBA is still that LLC. When you bring on staff, the trade name may appear on paychecks, storefronts, and tax forms, but the legal duties trace back to you or your registered entity.
For sole proprietors this matters a great deal. If an employee is injured on the job, files a wage claim, or sues, your personal assets can be reached because there is no legal wall between you and the business. An LLC or corporation operating under a DBA generally keeps personal assets separate from business liabilities, which is why many owners form an entity before their first hire.
Get an EIN Before Your First Hire
You need an Employer Identification Number from the IRS before hiring. Federal law requires an identifying number on tax returns and statements, and for employers that means an EIN rather than a personal Social Security number.2Office of the Law Revision Counsel. 26 USC 6109 – Identifying Numbers The EIN goes on all payroll tax filings, W-2s, and other employment documents.
Apply using Form SS-4.3Internal Revenue Service. About Form SS-4, Application for Employer Identification Number Line 1 takes your legal name (or the entity’s legal name); Line 2 takes the trade name — your DBA.4Internal Revenue Service. Instructions for Form SS-4 That links both names to a single tax account. You can apply online and receive the number immediately, or file by mail.
Filing employment tax returns with a missing or incorrect EIN triggers penalties. For 2026, the IRS assesses $60 per return if corrected within 30 days, $130 if corrected after 30 days but before August 1, and $340 per return if not corrected after that. Intentional disregard raises the penalty to $680 per return.5Internal Revenue Service. Information Return Penalties
Employee or Independent Contractor?
Before you hire, decide honestly whether the worker is an employee or an independent contractor. The classification decides whether you withhold taxes, pay the employer share of payroll taxes, carry workers’ compensation, and follow wage and hour laws.
The IRS looks at three categories of evidence:6Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
- Behavioral control: whether you direct how and when the work is done, or just the end result.
- Financial control: whether you reimburse expenses, supply tools, and set how the worker is paid.
- Type of relationship: whether there is a written contract, whether benefits are provided, and whether the work is a core part of your business.
No single factor decides it. If you are unsure, file Form SS-8 and the IRS will issue a written determination.7Internal Revenue Service. Instructions for Form SS-8 A misclassification finding leaves you owing back income tax withholding, Social Security, and Medicare, plus penalties and interest. Penalties are lower if you at least issued 1099s and doubled if you did not. Classify correctly from the start.
Paperwork Every New Hire Signs
Form I-9
Federal law requires every employer to verify the identity and work authorization of each new hire on Form I-9.8U.S. Citizenship and Immigration Services. Statutes and Regulations The employee completes Section 1 on or before the first day of work. You review the original identity and work-authorization documents and complete Section 2 within three business days of the hire date. Enter your business name (the DBA is fine), EIN, and address in the employer section. Keep each I-9 for three years after the hire date or one year after the person stops working for you, whichever is later.9U.S. Citizenship and Immigration Services. Retaining Form I-9
Form W-4
Each employee fills out a W-4 before their first paycheck. It tells you how much federal income tax to withhold based on filing status, dependents, and any adjustments.10eCFR. 26 CFR 31.3402(f)(2)-1 The employer section at the bottom takes your business name and address; the DBA can appear here if that is how the business operates publicly.
Report the Hire to Your State
Federal law requires you to report each new employee to your state’s Directory of New Hires within 20 days of the start date.11Office of the Law Revision Counsel. 42 USC 653a – State Directory of New Hires Some states set a shorter deadline. The report includes seven data points: the employee’s name, address, and Social Security number; the date the employee first performed work for pay; and your business name, address, and EIN.12Administration for Children and Families. New Hire Reporting – Answers to Employer Questions If you have employees in more than one state, you can pick a single state to receive all reports, but you must submit at least twice a month, between 12 and 16 days apart.
Payroll Taxes You Now Owe
Hiring means payroll taxes on every dollar of wages. There is an employer share and an employee share; you withhold the employee’s share and forward it with your own.
Social Security and Medicare
For 2026, the employer Social Security tax is 6.2% on wages up to $184,500 per employee.13Internal Revenue Service. Publication 15 (2026), Employer’s Tax Guide14Social Security Administration. Contribution and Benefit Base The employer Medicare tax is 1.45% on all wages with no cap. Employees pay matching amounts through withholding. Combined, FICA totals 15.3% of covered wages, split evenly.
Federal Unemployment Tax
FUTA imposes a 6.0% tax on the first $7,000 of wages per employee per year, paid entirely by the employer. If your state unemployment program meets federal standards (most do), you get a credit of up to 5.4%, bringing the effective rate to 0.6%.15Internal Revenue Service. Topic No. 759, Form 940
Filing Schedule
Most employers report Social Security, Medicare, and withheld income tax on Form 941 each quarter. The 2026 deadlines are April 30, July 31, October 31, and January 31 of the following year.16Internal Revenue Service. Instructions for Form 941 Deadlines that fall on a weekend or holiday move to the next business day. Very small employers whose annual liability for those three taxes is $1,000 or less may qualify to file Form 944 once a year instead.17Internal Revenue Service. About Form 944, Employer’s Annual Federal Tax Return FUTA is reported separately on Form 940, filed annually.
State Unemployment Tax
Nearly every state also requires employers to register for a State Unemployment Tax Act (SUTA) account and contribute to the state’s unemployment fund. You register with your state’s labor or workforce agency using your EIN and DBA. Rates vary widely, from under 1% for new employers in some states to over 10% for employers with a heavy layoff history, based on industry, payroll size, and experience rating. A handful of states also require an employee-side contribution through payroll withholding. Missing SUTA payments can produce penalties and interest and cost you the 5.4% FUTA credit.
Workers’ Compensation Insurance
Workers’ compensation covers medical costs and lost wages when an employee is hurt or gets sick because of the job. Most states require coverage as soon as you hire your first employee, though some exempt very small employers (a few states set the threshold at five workers), and Texas does not require it at all. Check your state’s workers’ compensation agency before hiring.
Policies are sold by private carriers or, in some states, through a state fund. Premiums track your total payroll, the type of work performed, and your claims history. Office work costs far less per payroll dollar than construction or manufacturing. Failing to carry required coverage can bring stop-work orders, fines, and personal liability for workplace injuries, which is a particularly dangerous exposure for a sole proprietor operating under a DBA because there is no corporate shield.
Five states and Puerto Rico also require employers to provide short-term disability insurance for non-work-related injuries and illnesses. In those jurisdictions you need a separate disability policy in addition to workers’ comp.
Wage, Hour, and Poster Rules
Any employer with even one employee is covered by the Fair Labor Standards Act, which sets the federal minimum wage at $7.25 per hour and requires overtime at one and a half times the regular rate for hours over 40 in a workweek.18U.S. Department of Labor. State Minimum Wage Laws Many states and some cities set higher minimum wages; pay whichever rate is greater.
You also must display certain workplace posters where employees can see them. Which posters apply depends on your size and industry, but most employers must post notices covering the federal minimum wage, the Family and Medical Leave Act (if applicable), and the Employee Polygraph Protection Act. The Department of Labor offers a free online advisor that identifies the posters your business needs.19U.S. Department of Labor. Workplace Posters
How Long to Keep Records
Different documents have different retention rules. Employment tax records, including W-4s, payroll registers, and deposit receipts, must be kept for at least four years after the tax is due or paid, whichever is later.20Internal Revenue Service. Employment Tax Recordkeeping Form I-9 follows its own rule: three years after the hire date or one year after the person leaves, whichever is later.9U.S. Citizenship and Immigration Services. Retaining Form I-9 General business tax records tied to income and deductions should be kept at least three years from the filing date, with certain situations, such as unreported income or worthless securities, extending that to six or seven years.21Internal Revenue Service. How Long Should I Keep Records?