Can sole proprietors have employees
- Gross pay per pay period
- $2,115.38
- Hourly equivalent
- $26.44
- Paid time off, hours a year
- 120
Every figure on this page is computed from the inputs you enter, by the method stated below it. The only constants HeadcountDesk supplies are the published federal payroll tax rates and the overtime multiplier, each cited where it is used. The defaults are a worked example to replace with your own.
Can sole proprietors have employees? Yes, any number. The proprietorship is a business structure and hiring is a registration: an employer identification number, state withholding and unemployment accounts, payroll with the withholding and the employer taxes, workers' compensation, and the records every employer keeps, with the owner personally liable throughout. The employee contract builder on this site writes the contract from your figures, free; HeadcountDesk Pro keeps the employee's file.
Try the free tools Free to use. No account, no card, no sign-up.
The registration
A sole proprietor can hire employees: the business gets an employer identification number, registers for state withholding and unemployment, withholds and pays the employer's share of Social Security and Medicare, pays FUTA, carries workers' compensation and keeps the records any employer keeps, and the owner remains personally liable for all of it because the proprietorship is not a separate entity.
The cost above the wage
The IRS gives the employer's share of Social Security as 6.2% of wages up to the $184,500 base for 2026 and Medicare as 1.45% with no limit, and FUTA as 6.0% on the first $7,000 of each employee's wages, reduced to 0.6% with the full 5.4% credit. The free true cost of employee calculator on this site adds state unemployment, workers' compensation and benefits and gives the annual total.
The documents
Contract, handbook, onboarding checklist, timesheet, review: the same six records as any employer. Each is a free tool on this site; Pro is the file.
The liability
The proprietor answers personally for payroll taxes and for the employee's claims. Forming an LLC is a separate decision and does not change the employee's position. From the vendors' own pricing pages: Homebase lists Essentials at $24 per location per month billed annually or $30 monthly, with a free Basic plan for one location of up to ten employees; BambooHR lists Core at $10 and Pro at $17 per employee per month; Deputy lists Core at $6.50 per user per month. HeadcountDesk Pro is $24 a month per location.
Can sole proprietors have employees: common questions
How many employees can a sole proprietor have?
There is no limit in the structure; the registration and the records are the same at one or fifty.
Do I need workers' compensation for one employee?
In most states, yes, from the first employee; check your state's threshold.
Is the contract builder free?
Yes. The free employee contract builder on this site writes the contract with no account. Pro keeps it against the employee.
Will it do what you need for Can sole proprietors have employees?
Tell us what your business needs and we will tell you straight whether HeadcountDesk Pro does it today, whether it is coming, or whether you are better off with something else. A person reads these and replies.