Hiring Your First Employee in Pennsylvania: Berks Rules

You're about to hire your first employee, and I'm guessing the job itself is the easy part. What you probably don't know is how many separate offices want to hear from you the moment somebody else's name goes on your payroll, or in what order.

Get a federal Employer Identification Number, buy a workers' compensation policy before your new hire works a single hour, and then work down a short list of registrations that each come with their own clock. None of it's optional, and most of the clocks start the week the person starts. The one step with a criminal penalty attached is workers' compensation, and it's also the one owners put off.

Before you cut the first paycheck, I'd also give an hour to a Berks County accountant. A small payroll mistake in month one repeats every pay period until somebody catches it, and a delinquency rate on your unemployment account follows you for years. An hour with someone who does this every day is cheap by comparison.

The order to register in when hiring your first employee in Pennsylvania

Here's the whole sequence, with where each step happens, when it's due, and what it costs. I'll explain each piece after the table.

The EIN goes first because every account after it asks for that number. It's free and the IRS issues it online.

One registration covers two of those rows. The Online Business Tax Registration at myPATH, the Department of Revenue's website, opens your employer withholding account and your unemployment compensation account together. Withholding is the 3.07 percent state income tax you take out of the employee's pay and send in for them. Unemployment compensation is the state fund that pays benefits to people who lose a job, and as a new employer outside construction you pay 3.8220 percent of the first $10,000 of each employee's wages in 2026. Employer Tax Services takes questions at 1-866-403-6163.

The unemployment deadline is the sharp one. You have 30 days from the first covered work to register. Register late and a 3 percent "Increase for UC Delinquency" goes onto your tax rate, with penalties up to $10,000 per assessment. That's the delinquency rate I mentioned.

Workers' compensation insurance has to be in force on day one

Workers' compensation is the insurance that pays medical bills and lost wages when an employee gets hurt doing the job. In Pennsylvania the requirement attaches at one employee, and owners ask me whether a part-time hire really counts. It does. The exclusions are a named list of twelve categories, and they're narrow. Railroad and federal workers, agricultural laborers earning under $1,200 a year, and sole proprietors and general partners with no other employees are among them. A part-time person doing the work your business does isn't on that list.

You have three ways to buy the policy.

• The State Workers' Insurance Fund, at 570-963-4635, sells coverage directly on form SWIF-429.
• A private carrier, which a Berks insurance agent can place for you.
• Self-insurance, alone or as a certified group, through the Self-Insurance Division at 717-783-4476.

Whichever way you go, the premium is priced off your class code, which is the category the insurer assigns to the kind of work your employee does, and your payroll. Coverage from the state fund begins the day after it receives a completed application and the premium check, not the day you mail them.

What happens if you skip it? Every day without coverage is a misdemeanor carrying a $2,500 fine and up to a year of imprisonment. An intentional violation is a felony, with a $15,000 fine and up to seven years. If your employee gets hurt while you're uncovered, the Uninsured Employers Guaranty Fund pays the claim and you reimburse the fund for what it paid. Compliance questions go to 717-787-3567.

Local taxes in Berks County: earned income tax and the Local Services Tax

Now comes the local layer, which surprises owners who have only ever filed for themselves. The earned income tax is a local tax on wages, and as the employer you withhold it. The statute says you register with the local tax officer within 15 days of becoming an employer, which is the quickest clock on this list.

In Berks, the earned income tax runs through one tax collection district, and its tax officer is the Berks Earned Income Tax Bureau, 1125 Berkshire Boulevard, Suite 115, Wyomissing, 610-372-8439. The bureau collects for 68 of the county's 72 municipalities, and employers file the detail for both local taxes electronically through its eReporting system. Four municipalities name someone else. Caernarvon Township, New Morgan Borough and Robeson Township name Keystone Collections Group, and Hereford Township names Berkheimer Tax Administrator.

Every new hire completes a residency certification form, CLGS-32-6, as an addendum to the W-4. It records the employee's home municipality and its PSD code, the state's identifying number for that political subdivision, next to your work site's. You then withhold the greater of the employee's resident rate or the nonresident rate for your work site. Hire someone who lives in the City of Reading and that resident rate is 3.6 percent, the largest local swing in the county. Returns and payment are due within 30 days after each calendar quarter ends.

The Local Services Tax is separate: a flat annual amount set by the municipality where the employee works, not where they live. Here's how it breaks down across the county's 72 municipalities for 2026.

Most of the county is at $52, and in the eleven municipalities that levy none there's nothing to withhold. In a $52 municipality you divide by your pay periods and round down to the cent, so weekly is $1.00, biweekly is $2.00, and semimonthly is $2.16. Where the rate is above $10, you exempt any employee whose earned income and net profits inside that political subdivision come to less than $12,000 for the year.

There's one more thing to check. The Local Services Tax collector isn't always the earned income tax collector. An employer in Kutztown Borough sends earned income tax to the Berks bureau and the Local Services Tax to Berkheimer Tax Administrator. In the City of Reading the Local Services Tax goes to Keystone Collections Group. Confirm both before your first remittance.

New hire paperwork: the I-9, the W-4, the new hire report and the posters

Form I-9 is the federal form that verifies the person is allowed to work in the United States. The employee completes Section 1 no later than their first day, and you complete Section 2 within three business days after that day by physically examining their documents. You don't mail it anywhere. You keep it for three years after the date of hire or one year after employment ends, whichever is later.

Form W-4 tells you how much federal income tax to withhold, and every new employee completes the 2026 Form W-4. Pennsylvania withholding is flat, with no allowances, so an ordinary hire has no state twin of that form.

Then report the hire to the Pennsylvania New Hire Reporting Program within 20 days of the date of hire, meaning the first day the person performs services for wages. Probationary, seasonal and part-time hires all count. You can file online at pacareerlink.pa.gov, by mail to P.O. Box 69400, Harrisburg, PA 17106-9400, or by fax at 866-748-4473, and the help line is 888-724-4737.

The posters are free downloads from the state, hung where everyone can easily see and read them. Four on the mandatory list apply to every Pennsylvania employer at this size: the Minimum Wage Law poster (LLC-1), which prints the $7.25 rate and the $2.83 tipped rate for an employee making $135.00 a month in tips; the Abstract of Equal Pay Law (LLC-8); the Unemployment Compensation poster (UC-700); and the Workers' Compensation Insurance Posting (LIBC-500). Hiring anyone under 18 adds the child labor abstract (LLC-5) and hours of work for minors (LLC-17). The workers' compensation posting can't be finished until the policy exists, because you write your insurer's name, address, phone and code onto it.

What your first employee costs on top of wages

The next list is the money that comes out of your pocket rather than the employee's.

• Social Security: 6.2 percent of wages, up to $184,500 in 2026.
• Medicare: 1.45 percent, with no wage cap.
• Federal unemployment: 6.0 percent on the first $7,000 of wages, against which a credit of up to 5.4 percent applies.
• Pennsylvania unemployment: the new-employer rate from the table above, to a maximum of $382.20 per employee. A new construction employer starts at 10.5924 percent.
• The workers' compensation premium, priced off class code and payroll.

Two more come out of the employee's pay rather than yours, the 3.07 percent state income tax and a 0.07 percent unemployment contribution. Your first calendar year in business you're a monthly federal depositor, and state withholding deposits speed up once you cross $300 in a quarter and again at $1,000. Form 940, the annual federal unemployment return, and your W-2s are due January 31.

Can you pay your first worker as a 1099 contractor instead

You can only if the relationship truly is one, and there's no scored test to hide behind. The IRS weighs behavioral control, financial control and the type of relationship, and no one factor stands alone. If you set the hours and direct how the work gets done, that's behavioral control, and it points toward employee. Construction is stricter. Act 72 requires a written contract, freedom from control, an independently established business, and criteria including liability insurance of at least $50,000.

If the business itself is new, the guide to starting a business in Berks County covers what comes before payroll. Finding the person is the other half of this, and a different job. A separate post covers where to post a job in Berks County, and you can put the listing on the BerksConnect job board, where a person reviews every posting. For now, print the table at the top, put the six dates on a calendar, and make the call to the accountant. If you do it in order, it's about a week of paperwork. If you do it out of order, it turns into a year of letters from Harrisburg and Wyomissing.