Hiring your first employee: the payroll checklist
Everything to set up before the first paycheck, in the order you’ll need it.
The short answer
Get an EIN, register for your state’s payroll and unemployment taxes, have the employee complete Form W-4 and Form I-9, report the new hire to your state, set up payroll and tax deposits, and arrange workers’ compensation coverage.
Before the offer
Make sure the role is truly an employee role, not a contractor. Get an Employer Identification Number if you don’t already have one.
Register with your state
Set up state income tax withholding (if your state has income tax) and state unemployment insurance accounts.
Day-one paperwork
Form W-4 for federal withholding, Form I-9 to verify work eligibility within three business days of the start date, and your state’s withholding form if it has one. Report the new hire to your state’s new-hire registry.
Payroll and deposits
A payroll service handles withholding, deposits and the quarterly Form 941 filings. Missing deposits gets expensive quickly.
Insurance
Most states require workers’ compensation coverage once you have employees.
Questions
Do I need a payroll service?
You can run payroll yourself, but deposit deadlines and filings are unforgiving. Most small businesses find a payroll service is worth it from the first employee.
Your situation isn’t general. A CPA can tell you how this applies to you.
Ask about thisGeneral information as of October 2026, not advice for your situation. Tax rules change; check with a professional before acting.