--- title: How to hire employees in the US as a startup, state by state description: "Hiring employees in the US means hiring in a state: entity or EOR, state payroll registration, at-will offer letters and non-compete rules for startups." image: https://funded.club/hubfs/og_image_funded.png --- [![Primary\_logo](https://funded.club/hubfs/Primary_logo.svg)](https://funded.club/) [Book a call](https://funded.club/contact-us) - [Hire](https://funded.club) - [Pricing](https://funded.club/pricing) - [Find a job](https://funded.club/startupjobs) - [Case Studies](https://funded.club/case-studies) - [Locally](https://funded.club/case-studies/locally) - [Supernova](https://funded.club/case-studies/supernova) - [Isolocity](https://funded.club/case-studies/isolocity) - [WeTravel](https://funded.club/case-studies/wetravel) - [Digital Science](https://funded.club/case-studies/digital-science) - [Blog](https://funded.club/blog-results) - [Resources](https://funded.club/resources) - [Predict success](https://signup.predict.ventures/) - [Growth Planner](https://funded.club/growth-planner) - [Glossary](https://funded.club/glossary) - [FAQ](https://funded.club/faq) - [Contact us](https://funded.club/contact-us) [Book a call](https://funded.club/contact-us) - Engagement options: - [Hiring solutions](https://funded.club) - [Pay-as-you-go](https://funded.club/pricing) - Membership plan # How to hire employees in the US as a startup, state by state [Ray Gibson](https://funded.club/blog/author/ray-gibson) Nov 9, 2026, 10:34:06 PM *Updated November 2026* To hire employees in the US as a startup, you either set up a US entity (often a Delaware C-corp) and run payroll yourself, or employ people through an employer of record (EOR) provider while you get set up. Either way, you are really hiring in a state: each state where an employee lives can mean a new payroll registration and its own rules on leave, final pay and non-competes. ## Hiring in the US means hiring in a state Federal law sets a floor, covering things like minimum wage, overtime and the Form I-9 work eligibility check. Most of what changes your day-to-day as an employer is set by the state where the employee lives and works. For remote teams, hiring in a state where you have no employees yet usually means registering there for payroll taxes and unemployment insurance, and sometimes registering the company to do business there. Some cities add their own sick leave or minimum wage rules. So the useful hiring question is which states your candidates live in. Our general guide to [European startups hiring in the US](https://funded.club/blog/european-startup-hiring-in-the-us) covers the market and the talent side. ## Worked example: two sales hires, two states Illustrative. Sofia runs a Berlin-based Seed SaaS startup and wants her first two US account executives. The best finalists live in Austin and Los Angeles, and she would rather hire the strongest people than limit the search to one state. HIRE 1 LIVES IN Texas **Payroll:** no state income tax to withhold, but you still register for state unemployment insurance. **Restrictive covenants:** a non-compete can be enforceable if it is reasonable and properly supported. **Leave:** few state-level leave mandates beyond federal law. HIRE 2 LIVES IN California **Payroll:** state income tax withholding and state payroll taxes, through a separate state registration. **Restrictive covenants:** employee non-competes are generally void, so rely on confidentiality and IP assignment. **Leave and final pay:** paid sick leave is mandatory and final pay deadlines are strict. Same job title, two quite different setups. Sofia’s European contract template also included a non-compete, which would generally be unenforceable for the Los Angeles hire, so her lawyer replaces it with confidentiality and invention assignment wording that fits California. ## Entity, EOR or contractor in the US | Route | Works well when | Watch for | | --- | --- | --- | | **Your own US entity** | You are raising from US investors, expect several US hires, or plan to sell to US enterprise buyers. | Each new state adds registrations. A payroll provider helps, but you own compliance. | | **EOR provider** | You want the first one or two hires running quickly, perhaps in different states, before the entity is ready. | Benefits and equity need checking. Plan the move onto your own payroll later. | | **Independent contractor** | The work is a defined project and the person runs their own business. | A full-time seller working to your targets usually looks like an employee. Some states, California among them, apply a stricter test. | Sofia chooses an EOR for both hires. Her US entity is still being formed and the EOR already covers both states, so her sellers can start without two sets of registrations. She will move them onto her own payroll later. ## At-will employment, and how offer letters undermine it Employment in the US is at-will by default in nearly every state, Montana being the well-known exception. Either side can usually end the relationship without notice or cause, provided the reason is not discriminatory or otherwise unlawful. THE OFFER LETTER MISTAKE European templates promise security that US at-will employment does not. Phrases like "permanent position", a guaranteed term, or a promise that dismissal only follows a warning process can be read as a contract that limits at-will. Use a US offer letter with a clear at-will statement, and keep the handbook consistent with it. US candidates also commonly expect employer health insurance in the package, even where a small employer is not required to offer it. They usually give short notice when resigning, so start dates come round faster than European founders expect. ## The state checklist nobody hands you Whoever runs payroll should work through this for every new state. If you use an EOR, ask them to confirm each item. Before the first payroll in a new state ✓ Register for state income tax withholding, where the state has an income tax. ✓ Register for state unemployment insurance. ✓ Check whether the company must register to do business in that state. ✓ Arrange workers’ compensation cover that meets the state’s rules. ✓ File the state new hire report and complete Form I-9 within the federal deadline. ✓ Review the state’s paid sick leave, family leave and final pay rules, plus any city rules. Rules change and depend on your situation, so confirm the details with a US employment lawyer, an accountant or your EOR provider before each offer. To plan the search alongside the setup work, try our [hiring timeline estimator](https://funded.club/hiring-timeline-estimator). ## Where Funded.club fits We are a fixed-fee recruiting partner for funded startups and fast-growing teams across North America, Europe and APAC, and since 2019 we’ve helped 500+ startups from Seed to Series D. Our fully remote recruiters can search across US states while your entity or EOR handles employment and payroll. One dedicated recruiter runs each search end to end, with first screened candidates within 7 days and 33 days on average from kick-off to hire. We agree a low fixed fee upfront, averaging 6 to 9% of salary against the 20 to 25% typical of contingency recruiters. Illustrative: if both of Sofia’s hires fall in our up to $150,000 band, the fee is $11,500 each, $23,000 in total. Part is an advance at the start and the balance when the candidate accepts, and if we don’t deliver a shortlist of at least 3 qualified candidates within 30 days, you can claim the advance back in full. See our [pricing page](https://funded.club/pricing). ## Frequently asked questions ### Can a foreign startup hire employees in the US without a US company? Yes, through an employer of record (EOR) provider, which employs the person on your behalf and runs payroll in their state. Many startups later move them onto their own US entity. ### Do I need to register in every state where a remote employee lives? Usually yes, for payroll taxes and unemployment insurance, and sometimes to do business there. An EOR handles this for the employees it employs. ### Are non-compete agreements enforceable in the US? It depends on the state. California generally voids employee non-competes, several states restrict them and others enforce reasonable ones, so have a lawyer review them per state. ### Is US employment really at-will? It is the default in nearly every state, Montana being the main exception, but offer letters or handbooks that promise job security can weaken it. Worth a brief chat about your next hire? [Book a free call](https://funded.club/contact-us). ## Hiring after a funding round? First candidates in 7 days. Fixed-fee, no commission. [See pricing](https://funded.club/pricing) [Book a free call](https://funded.club/contact-us) [Try the Growth Planner](https://funded.club/growth-planner) [![Primary\_logo](https://funded.club/hubfs/funded-images2022/Primary_logo.svg)](https://funded.club) © 2019-2026 Funded.club B.V. All Rights Reserved. Chamber of Commerce: 63083809    VAT (BTW): NL855084844B01 ## Contact Us - [Hiring service](https://funded.club) - [Pricing - Recruiting projects](https://funded.club/pricing) - [Find a job](https://funded.club/startupjobs) - [Our team](https://funded.club/fundedteam) - [Blog](https://funded.club/blog) - [Case studies](https://funded.club/case-studies) - [Startup resources](https://funded.club/resources) - [FAQ](https://funded.club/faq) - [Contact Us](https://funded.club/contact-us) ## Follow Us © 2019-2026 All rights reserved. - [Privacy Policy](https://www.iubenda.com/privacy-policy/56133290) - [Cookie policies](https://www.iubenda.com/privacy-policy/56133290/cookie-policy) - [Terms of Use](https://funded.club/terms) ```json { "@context" : "https://schema.org", "@type" : "BlogPosting", "author" : { "@id" : "https://funded.club/#ray-gibson" }, "dateModified" : "2026-11-09", "datePublished" : "2026-11-09", "headline" : "How to hire employees in the US as a startup, state by state", "image" : [ "" ], "mainEntityOfPage" : { "@id" : "https://funded.club/blog/hiring-employees-in-the-us", "@type" : "WebPage" }, "publisher" : { "@id" : "https://funded.club/#organization" } } ``` ```json { "@context" : "https://schema.org", "@id" : "https://funded.club/#organization", "@type" : "Organization", "areaServed" : [ "North America", "Europe", "Asia-Pacific" ], "description" : "Fixed-fee recruiting partner for funded startups and fast-growing teams across North America, Europe and APAC. 500+ startups helped since 2019. 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