You’re ready to hire.
You need payroll systems.
You want compliance.
You need a checklist.
EIN setup. State IDs. Payroll systems. Compliance. Your preparation.
This guide shows you how.
Complete checklist. Setup requirements. System configuration. Your readiness.
Read this. Complete the checklist. Post your job.
Key Takeaways
- Get your EIN first—EIN is required for payroll, tax withholding, and employee reporting before you can legally hire
- Register for state tax IDs—state unemployment insurance, income tax withholding, and workers' compensation require separate state registrations
- Choose payroll software—select payroll software that integrates with your EIN and handles tax calculations and reporting
- Set up direct deposit—configure direct deposit systems to pay employees efficiently and comply with payment requirements
- Test your systems—verify payroll calculations, tax withholdings, and reporting before processing your first payroll
Table of Contents
Why Setup Matters
Setup ensures legal compliance.
What happens without setup:
- Payroll violations occur
- Tax compliance issues arise
- Legal problems develop
- Employee payment delays
What happens with setup:
- Payroll runs smoothly
- Tax compliance is maintained
- Legal requirements are met
- Employees are paid on time
The reality: Setup prevents problems.
EIN Setup
Complete EIN setup:
Get Your EIN
What to do:
- Apply for EIN
- Provide business information
- Submit required documents
- Receive confirmation
Why it matters: EIN is required for payroll.
Verify EIN Status
What to verify:
- EIN is active
- Information is correct
- Documents are filed
- Records are updated
Why it matters: Verification prevents problems.
Update EIN Records
What to update:
- Business address
- Responsible party
- Entity information
- Contact details
Why it matters: Updated records ensure accuracy.
Pro tip: Complete EIN setup. Get EIN, verify status, update records. See our EIN guide for application.
State IDs
Register for state IDs:
State Unemployment Insurance
What to register:
- State unemployment account
- Employer account number
- Tax rate information
- Reporting requirements
Why it matters: Unemployment insurance is required.
State Income Tax Withholding
What to register:
- State tax account
- Withholding registration
- Tax rate information
- Reporting requirements
Why it matters: Income tax withholding is required.
Workers’ Compensation
What to register:
- Workers’ comp account
- Coverage requirements
- Premium information
- Reporting requirements
Why it matters: Workers’ compensation is required.
Pro tip: Register for all state IDs. Unemployment, income tax, workers’ comp. See our hiring guide for state requirements.
Payroll Systems
Set up payroll systems:
Choose Payroll Software
What to choose:
- Software that integrates with EIN
- Tax calculation capabilities
- Reporting features
- Employee self-service
Why it matters: Software enables payroll processing.
Configure Tax Settings
What to configure:
- Federal tax settings
- State tax settings
- Local tax settings
- Withholding calculations
Why it matters: Tax settings ensure accuracy.
Set Up Direct Deposit
What to set up:
- Bank account information
- Direct deposit authorization
- Payment schedules
- Employee enrollment
Why it matters: Direct deposit enables efficient payment.
Pro tip: Set up payroll systems. Choose software, configure taxes, set up direct deposit. See our hiring guide for payroll setup.
Compliance Requirements
Meet compliance requirements:
Federal Requirements
What to comply with:
- Federal income tax withholding
- Social Security and Medicare taxes
- Federal unemployment tax
- Employee reporting
Why it matters: Federal compliance is required.
State Requirements
What to comply with:
- State income tax withholding
- State unemployment insurance
- Workers’ compensation
- State reporting
Why it matters: State compliance is required.
Record Keeping
What to keep:
- Employee records
- Payroll records
- Tax records
- Compliance documents
Why it matters: Record keeping supports compliance.
Pro tip: Meet all requirements. Federal, state, record keeping. See our hiring guide for compliance.
Testing and Verification
Test and verify systems:
Test Payroll Calculations
What to test:
- Gross pay calculations
- Tax withholding calculations
- Net pay calculations
- Deduction calculations
Why it matters: Testing ensures accuracy.
Verify Tax Withholdings
What to verify:
- Federal tax withholdings
- State tax withholdings
- Local tax withholdings
- Total withholdings
Why it matters: Verification prevents errors.
Test Reporting
What to test:
- Payroll reports
- Tax reports
- Employee reports
- Compliance reports
Why it matters: Testing ensures proper reporting.
Pro tip: Test everything. Calculations, withholdings, reporting. See our hiring guide for testing.
Your Next Steps
Complete the checklist. Set up systems. Post your job.
This Week:
- Review this checklist
- Get your EIN
- Register for state IDs
- Choose payroll software
This Month:
- Complete EIN setup
- Register for all state IDs
- Set up payroll systems
- Test and verify systems
Going Forward:
- Process payroll regularly
- Maintain compliance
- Update systems as needed
- Scale your payroll
Need help? Check out our EIN application guide for getting your EIN quickly, our hiring guide for employee requirements, our timeline guide for hiring phases, and our registered agent guide for business address setup.
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Sources & Additional Information
This guide provides general information about payroll setup requirements. Your specific situation may require different considerations.
For EIN application, see our EIN Application Guide.
For hiring employees, see our Hiring Guide.
For hiring timeline, see our Timeline Guide.
For registered agent services, see our Registered Agent Guide.
Consult with professionals for advice specific to your situation.
