Payroll 101: Setting up for your first employee

As your business builds steam, you will come to a point in the road where you have to decide: is this as big as I want to get, or is it time to bring in some help and take things to the next level? If you decide to hire your first employee, there are a few logistical steps you have to take before you actually bring someone on board:

Get a federal EIN if you don’t already have one (there are a million scam sites out there–use the real federal site and don’t pay for anything).

Set up EFTPS account to pay the federal payroll taxes

Register with the State Department of Revenue for state withholding

Register with the State Unemployment office

Get Workers Compensation Insurance

Other things to think about: You will need to consider a compensation plan for holidays, vacation and leave, what schedule you want to use for payroll (weekly, biweekly, monthly, etc), and decide how your employees will record and submit their hours.

A word of advice: You will have much less chance of error and frustration if you use payroll software rather than trying to do it manually. We use and recommend Gusto, which not only runs payroll and handles tax payments, but is sort of an HR all-in-one tool that can really help you track your employee’s journey. Setting this system up early will make a huge difference as your business grows and you are trying to manage the employment process.

To make the process easier, there are links to all of these sites as well as a Gusto referral link in our bio. If you’d rather not deal with payroll and you’d like to hire a professional to do it for you, go here. Happy hiring!