This is the way.I voted level 1, because you don't have a 0 level option. Very few NPCs in my Greyhawk ever achieve anything like a class level. They can, however, become better at a particular skill because I don't require NPCs to work the same way as a PC. A master weaponsmith might have a +10 modifier while still only having 6 HP.
I also have given 0-1st level npcs feats or skills, much like your 4th level voting option.