payroll setup checklist for new employers

federal setup before your first payroll

You need a federal Employer Identification Number (EIN), which you apply for online and receive immediately. You also need to choose a payroll schedule that aligns with state pay-frequency laws — some states require specific frequencies (semi-monthly, for example) or minimum number of days between paydays.

Register for federal unemployment (FUTA) and determine your deposit schedule for employment taxes. Most new employers start as a monthly depositor; businesses with larger accumulated liabilities move to a semi-weekly or next-day schedule.

state registrations

Every state where an employee works generally requires its own employer tax accounts: state income-tax withholding, state unemployment insurance (SUI), and (in some states) disability or paid-leave programs. Missing the SUI registration is the single most common first-quarter fine for new employers.

If you have employees in multiple states, you must register in each one — payroll taxes follow the employee's work location, not your headquarters. Reciprocal agreements between some states simplify withholding for cross-border employees, but the registration still has to happen.

• State income-tax withholding account
• State unemployment insurance (SUI) account
• New-hire reporting (required within days of hire in every state)
• Paid family/medical leave or disability where applicable

per-employee setup

Each employee needs a completed Form W-4 (federal withholding) and the state withholding equivalent, a Form I-9 for work authorization (kept on file, not submitted), and a decision on benefits, garnishments, and direct deposit. Contractors need a Form W-9 on file before the first payment so year-end 1099 reporting is clean.

Reasonable documentation matters: verify the W-4 against the Social Security Administration's records, confirm direct-deposit authority in writing, and keep I-9s separate from the personnel file as the rules require.

deposit schedules and reporting

Payroll taxes have strict federal deposit schedules — monthly, semi-weekly, or next-day depending on accumulated liability — and late deposits carry penalties that compound monthly. The quarterly Form 941 (federal payroll tax return) and annual Form 940 (FUTA), plus W-2s and W-3s, must reconcile exactly to what you deposited during the year.

For 2026 the Social Security wage base is $184,500 and the employer FICA rate is 7.65% (6.2% Social Security + 1.45% Medicare). Getting these numbers right on every check is the foundation; reconciling them on every return is the control.