How to Set Up S-Corp Payroll as an Accounting Firm Owner

Setting up S corporation (S-corp) payroll for your own accounting firm takes several steps: open your payroll tax accounts, set your reasonable compensation, choose a pay schedule, and run your first payroll.  

If you're an active owner-employee of an S corporation, the IRS generally expects you to pay yourself reasonable compensation through payroll before taking distributions.  

SurePayroll® By Paychex is built for single-owner S-corps and small teams running this setup.

What to have in place before you run your first payroll

Before your first payroll run, gather the accounts, registrations, and information you'll need to complete setup.

Many accounting firm owners will already have some of these items in place from forming the business and filing their S-corp election. Review the list before selecting your first payroll date.

• Employer Identification Number (EIN). You need an EIN tov run payroll, file federal payroll tax forms, and enroll in EFTPS.

• State employer registrations. Most states require a state withholding account, a state unemployment insurance (SUI) account, or both before you run payroll. Confirm requirements with the agencies in your state.

• Business bank account information. Have your routing and account numbers available for payroll funding, direct deposit, and payroll tax payments.

• Reasonable compensation amount. Determine your owner-employee reasonable salary before setting up payroll. You'll use that figure throughout the payroll setup process.

• Pay schedule. Monthly, semimonthly, and biweekly are the standard pay frequency options for a single-owner S-corp. ​​​​Monthly is the most common starting point.

• EFTPS enrollment. You need to make federal payroll tax deposits through EFTPS. Enrollment can take several business days, so it is usually one of the first setup steps to complete.

If registrations are still pending, start those applications first. State account approvals and EFTPS enrollment often take longer than the payroll setup.

Determine your reasonable compensation before payroll setup

Before you run payroll, determine the reasonable compensation amount you'll use for your salary. That amount helps determine your payroll setup and ongoing wage calculations.

The IRS requires active owner-employees to pay themselves reasonable compensation, but doesn't publish a fixed number. Instead, reasonable compensation is based on factors such as the services you perform, your responsibilities, comparable market compensation, and your firm's financial circumstances.

Document the factors you used to arrive at your compensation figure and retain that information with your business records.  

Read more about how to determine reasonable compensation for your S-corp.  

Choose a payroll approach that fits your firm  

Once payroll is set up, you'll need a process for running payroll, making tax deposits, filing returns, and producing annual payroll forms.

Accounting firm owners generally have three options:

Handle payroll yourself.
Managing payroll in-house gives you complete control over the process, but it also puts payroll calculations, tax deposits, filings, and year-end reporting on your calendar.

Work with a payroll professional.
Outsourcing payroll shifts the administrative work to a third party, but may involve additional fees and deadlines that aren't entirely under your control.

Use automated payroll software.

An online payroll software solution like SurePayroll automates calculations, tax filings, deposits, and reporting, so you can manage payroll on your own schedule.

Think about how much time payroll will require each month. According to the National Small Business Association's 2024 Small Business Taxation Survey, 41% of small business owners spend three to 10 hours each month handling payroll taxes internally, while another 10% spend more than 10 hours per month on payroll tax administration.

In a 2025 SurePayroll customer survey, 42% of small business owners said time spent on payroll was a primary reason they switched to an online payroll service.

Whether you manage payroll yourself, work with a payroll professional, or use payroll software, the question is the same: Is payroll administration the best use of your time?

"It is very simple to use. I can get the payroll done in no time, which is great so I can move on the the next task."  Christie, Trustpilot review

Read more: How to choose between manual payroll and automated payroll.

Choose a pay schedule you can maintain year round

Monthly and biweekly are common payroll schedules for owner-only S-corps. The best choice often depends on how you want to manage payroll, cash flow, and administrative work.

Client payments don't always arrive on a predictable schedule. Retainers, project work, and seasonal demand can all affect when revenue comes in. Your payroll schedule shouldn't change with those fluctuations.

Monthly payroll reduces the number of payroll runs and may be easier to manage if you're handling payroll yourself.

Biweekly payroll creates a more regular pay cadence and may feel more familiar if you expect to add employees in the future.

Whichever schedule you choose, establish it early and follow it consistently. A predictable payroll schedule is easier to manage than changing frequencies throughout the year. Regular payroll payments help distinguish salary from shareholder distributions and create a predictable payroll process throughout the year.

Run your first payroll run as an accounting firm owner

With your registrations complete, reasonable compensation determined, and payroll schedule selected, you're ready to run payroll.

1. Add yourself as a W-2 employee. Enter your legal name, Social Security number, address, compensation amount, and pay schedule.

2. Complete Form W-4. Your payroll system uses this information to calculate federal income tax withholding. Keep a copy with your payroll reports and records.

3. Review payroll settings. Confirm your compensation amount, pay dates, direct deposit details, and tax settings before submitting payroll.

4. Understand who is handling tax deposits and filings. Before running payroll, confirm whether payroll tax deposits, quarterly filings, and year-end forms will be managed by you, your payroll provider, or your payroll software.

5. Run payroll. Your payroll system calculates state, if applicable, and federal withholding, employee and employer FICA taxes (Social Security and Medicare), and any applicable state payroll taxes.

6. Retain your payroll records. Save payroll reports, pay stubs, and related documentation with your business records.

"To start payroll for the first time can be intimidating. SurePayroll has made this process as simple as possible. I just followed the step-by-step process. Couldn’t be any easier."
Roger, Trustpilot review

Your ongoing payroll responsibilities

With payroll in place, the focus shifts from setup to ongoing payroll management. As an S-corp owner-employee, you'll continue making payroll tax deposits, filing taxes and required payroll tax forms, and issuing year-end tax documents.

Depending on how you manage payroll, those responsibilities may be handled by you, your payroll provider, or your payroll software. Common payroll responsibilities include federal payroll tax deposits, Federal Unemployment Tax Act (FUTA) reporting, and forms such as Form 941, Form 940, and Form W-2, each with its own filing requirements and deadlines.

SurePayroll automates the calculation of your FUTA liability, deposits taxes on your schedule, and generates your Form 941, Form 940, and W-2 filings as part of full-service payroll processing.

For more information about payroll tax deposits, quarterly filings, annual forms, and filing deadlines, see the guide to S-corp quarterly payroll tax filings.

Put your firm's payroll in motion

Setting up S-corp payroll is largely a one-time process. Once your registrations are complete, your reasonable compensation is documented, and your payroll schedule is established, you're ready to run payroll.

SurePayroll is built for that full run: salary processing, tax deposits, and quarterly filings for small S-corps.  

See plans and pricing for your small business.