When you hire a new employee, head to the People section of your Gusto admin account to start onboarding them. Choose an accordion for steps to onboard an employee, how to handle remote and international hires, add a new hire to payroll, and more.
Watch our video below for guidance on hiring employees in new states.
If you're adding employees for the first time while setting up your account, reference this article.
Follow these steps to add an employee to Gusto without sending an offer letter. If you want to send an offer letter before onboarding them, check out the steps below in the "Add a candidate (with an offer letter)" section below.
Gusto will assign each employee a unique identifier, their Gusto employee ID. This is a 6-character alphanumeric ID (e.g. 5G9934) that is securely generated and randomly assigned. It's meant to help with running payroll with CSV and record keeping.
If you're rehiring a previously dismissed employee, follow the steps in this article instead.
You'll be taken to the Onboarding team members tab. Find the new employee's name and click the action menu to begin their onboarding and add them to payroll.
After you add your new employee to payroll, Gusto will email them an invitation to set up their account and complete their onboarding tasks. If you offer benefits with Gusto, they'll be automatically invited to enroll in benefits once their new hire waiting period is complete.
When you add someone to Gusto as a candidate, you can send them an offer letter and run a background check (if included in your plan).
If you don't want the new hire to receive an offer letter or a background check, add them as an employee instead with the steps above. If you're rehiring a previously dismissed employee, follow the steps in this article.
Before you add a candidate, make sure your company has already created an offer letter template.
When the candidate signs the offer, we'll notify you to complete their onboarding and add them to payroll. You can view, update, or rescind offers from the Hiring tools section.
Gusto assigns each employee a unique identifier, their Gusto employee ID. The 6-character alphanumeric ID (e.g. 5G9934) is securely generated and randomly assigned. It's meant to help with running payroll with CSV and record keeping.
The work location you enter in Gusto for a new hire depends on several things: where your employees decide to live and work, how long they’ll live or work in a given state, if the states have reciprocity, and a variety of other factors.
Understanding these dependencies can sometimes feel like a challenge, but we’re here to help.
In most cases, you’re required to withhold taxes in the state where your employee physically works—which can either be their resident or non-resident state.
The golden rule is that taxes are owed in the place where work is done. When preparing to hire a remote worker in a new state, you’ll usually need to register with the state where the employee is living and working in addition to where your business is located. It’s important to understand your withholding obligations in both states.
Each employee's work address should be the address where their work physically takes place. Most employees work and live in the same state.
State laws vary. If you have employees working in another state, you’ll need to understand that state’s employment tax laws to determine if you are required to pay taxes to both their home and their work state. Consult a legal or tax advisor who can help you.
How to handle this in Gusto
Here too, the golden rule is that taxes are owed to the state where the work is done. But—some states have agreements that allow employees who work in one state and live in another to only pay income taxes to their state of residency (aka their home state). This is called a reciprocal agreement. Whether the states you’re dealing with have these agreements could affect an employee’s income tax withholdings.
How to handle reciprocal agreements in Gusto
To be able to withhold and pay income taxes on your employees’ behalf in their home state, your business needs to register for a withholding account in that state.
What if the home state and work state don’t have reciprocity?
If the two states do not have reciprocity, Gusto will withhold income tax (and unemployment, too) in the employee’s work state in Gusto. This means Gusto withholds income tax only from their non-resident state.
Gusto does not support flexible (variable) “courtesy” withholding–for now, there are safeguards in place to make sure that the required payroll taxes, both unemployment taxes and income withholding taxes, are calculated and withheld based on the work address on file for employees during the work period you pay them for.
*Exception: courtesy withholding is supported for employees who work in Idaho, and live in either Washington or Wyoming.
When hiring a remote employee, you’ll need to follow the pay and labor laws in the state where they are—which could differ from the laws in the state where your business is located.
Here are some considerations to familiarize yourself with for each employee that works in another state, so you stay compliant:
Gusto does not support employees living internationally or in U.S territories (like Puerto Rico or the U.S. Virgin Islands). Gusto only supports employees with all of the following:
If the contractor’s mailing address is different from where the work was performed and you need a 1099 to be created for the work state, please contact us.
While hiring a remote contractor is generally less complicated than hiring a remote employee, misclassifying an employee as a contractor could lead to serious tax penalties. Before hiring a new teammate, check out our blog article on the difference between employees and contractors.
Gusto supports international contractors on a limited pilot (beta). Check out the list of countries you can pay international contractors in.
Based on the employee’s date of birth, we’ll estimate their monthly premium cost. The summary provides a range of monthly premium costs based on the various benefits and plans you offer, and whether or not the employee has dependents.
If you’d like to see the premiums of each plan, click Download Cost Breakdown (PDF). The PDF breaks down the employee, spouse, and child cost for each plan that you offer.
Assumptions & methodology: estimated costs are used for illustrative purposes only. Actual costs will vary. The estimated cost assumes that any child dependent is younger than 18 and any spouse is the same age as the employee.
Review the onboarding timeline for your new employee and click Send invitation. On the next page, you'll see their onboarding checklist to review and complete other tasks as needed.
Resend the welcome email