Hiring Your First Employee: The Payroll and Paperwork Checklist

Hiring your first employee means taking on new payroll and employer responsibilities. Before you post or fill the role, determine how the worker and the position should be classified. Then set your business up as an employer, complete the required new hire paperwork, set up payroll, report your new hire, and plan for your payroll tax deposits and year-end filings.

With SurePayroll® By Paychex, you run payroll and pay your employee by direct deposit, and SurePayroll files your payroll taxes and reports your new hire.

First employee checklist: what to do before and after your employee starts

Your responsibilities as an employer start before you post the job and continue through year-end reporting.

Get your business ready to hire your first employee

Before you hire your first employee, determine how the worker and the position should be classified, then get the employer registrations and coverage your business needs. First, decide whether the role should be filled by an employee or an independent contractor.

If you're hiring an employee, determine whether the position is exempt or nonexempt under federal and state wage and hour rules. Job titles alone don't determine exempt status, and neither does paying a salary. These decisions shape how you pay the worker, whether overtime applies, and which payroll requirements and employment laws apply. Exempt vs. nonexempt employees explains how the tests work.

Once you know you're hiring an employee, make sure your business has an employer identification number (EIN). You'll use your EIN to report wages and pay federal payroll taxes. If you don't already have one, you can apply for an EIN free through the IRS.

Register with your state for a state unemployment insurance account and, if your state has an income tax, a withholding account. Your state assigns the account numbers and the unemployment tax rate you'll use to report and pay those taxes, so complete the registrations, generally before your first payroll run.

Then check your state's workers' compensation insurance requirements and your federal and state posting requirements. Most states require employers to carry workers' compensation coverage, although when coverage becomes mandatory varies. Display the federal workplace posters that apply to your business, using the U.S. Department of Labor's poster guidance as a starting point, and any additional posters your state requires.

Complete the required paperwork for your new employee

By your employee's first day, collect the federal and any state withholding forms you'll need for payroll and begin Form I-9, Employment Eligibility Verification. Your employee completes Section 1 of Form I-9 by their first day of work, and you generally complete Section 2 within three business days.

IRS Form W-4, Employee's Withholding Certificate, tells you how to calculate federal income tax withholding from your employee's pay. Ask your employee to complete it by their first day so you have what you need for their first paycheck. If an employee doesn't provide a completed Form W-4, IRS default withholding rules apply. Keep the completed W-4 in your records. Your state may also require a separate withholding form.

Form I-9 has a different purpose: verifying your employee's identity and authorization to work in the United States. Your employee completes Section 1, then you review the required documentation and complete Section 2. If the job will last fewer than three business days, you complete Section 2 by the employee's first day. Keep the completed Form I-9 in your records. USCIS publishes the current form and instructions.

Collect your employee's bank information for direct deposit with the rest of their onboarding paperwork. This part of hiring takes real attention: in the SurePayroll First Hire Report, a July 2026 survey of U.S. small business owners who have hired at least one employee, about 1 in 6 (16.1%) said paperwork and compliance administration was the hardest part of their first hire.

Set up payroll and schedule your first payroll run

Before your first payday, decide how often you'll pay your employee and how you'll run payroll. Your pay schedule sets how often your employee is paid. Your payroll process covers how you'll calculate wages and deductions, withhold taxes, pay your employee, and meet your payroll tax obligations. You can run payroll yourself or set up a payroll system through payroll software or a payroll provider.

As you plan your first payroll, budget for more than your employee's gross wages. You'll also pay employer payroll taxes, including your share of Federal Insurance Contributions Act (FICA) taxes for Social Security and Medicare, generally federal unemployment tax (FUTA), and state unemployment insurance (SUI) taxes where applicable. In the same 2026 SurePayroll survey, 21.4% of owners surveyed said they'd set aside more for payroll taxes before running their first payroll.

The true cost of your first hire shows how those taxes add up.

If you use a payroll provider, you'll typically need your EIN, your state withholding and unemployment account numbers, your state unemployment tax rate, and your employee's withholding information, pay rate, and bank information. You'll also authorize the provider to make certain payroll tax deposits and filings on your behalf. Form 8655, Reporting Agent Authorization, is the IRS form that gives a reporting agent that authority. The provider acts for you, and the payroll taxes remain your responsibility.

Work backward from payday to set when you need to complete and submit payroll so your employee is paid on time.

With SurePayroll, you run payroll and pay your employee by direct deposit, and SurePayroll calculates wages, deductions, and payroll taxes for each pay period.

SurePayroll is simple, efficient, and so easy to set up. [My rep] got on the line and walked me through my very first payroll. Now I'm off and running. I recommend their service!

— JRF, Trustpilot review

Report your new hire to your state

Report your new employee to the state where they work within 20 days of their date of hire, or sooner if that state requires it. Your state's new hire reporting program tells you what information to provide and how to submit the report. New hire reporting requirements covers the details.

New hire reporting is included on all SurePayroll plans.

Deposit payroll taxes and file returns after your first payroll

After you start paying your employee, you have two separate federal payroll tax obligations: depositing taxes and filing returns that report those taxes. As a new employer, you generally deposit federal income tax withholding and Social Security and Medicare taxes monthly during your first calendar year, and you file Form 941, Employer's Quarterly Federal Tax Return, quarterly.

These deposits include the federal income tax withheld from your employee's wages plus both the employee and employer shares of Social Security and Medicare taxes. Federal unemployment tax (FUTA) has its own deposit rules. As a new employer, you generally deposit taxes from wages paid during a month by the 15th of the following month. If the due date falls on a weekend or legal holiday, the deadline generally moves to the next business day.

Two exceptions can change that schedule. If your accumulated liability for these taxes reaches $100,000 or more on any day, a next-business-day deposit rule applies. If these taxes for the current or prior quarter total less than $2,500, you may not need to make monthly deposits at all: you can pay that quarter's taxes when you file Form 941 on time.

Form 941 reports wages, federal income tax withheld, and Social Security and Medicare taxes for the quarter. It's generally due by the last day of the month after each quarter ends. Your payroll tax deposit schedule is separate from both your employee's pay schedule and your Form 941 filing schedule. State payroll taxes have their own deposit and filing requirements, so check with your state.

SurePayroll calculates, deposits, and files your federal and state payroll taxes.

Prepare Forms W-2 and W-3 at year end

After the calendar year ends, you report your employee's annual wages and tax withholding on IRS Form W-2, Wage and Tax Statement. You give Form W-2 to your employee and file the wage information with the Social Security Administration (SSA), along with Form W-3, Transmittal of Wage and Tax Statements. Both are due by January 31, or the next business day if January 31 falls on a weekend or federal holiday.

Your year-end payroll responsibilities may also include Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, as well as state year-end filings. Keep complete payroll records throughout the year so you have the wage and tax information you need when these forms are due. The year-end payroll checklist walks through each one.

Run payroll for your first employee with SurePayroll

Your first hire changes your business, and payroll shouldn't slow down what comes next. With SurePayroll, you pay your employee, keep payroll taxes filed and deposited, and keep payroll moving as your business grows.

‍See plans and pricing to get started. Built for your first hire.