PHASES

Phase 1: Before The Employee Starts

Apply for an Employer Identification Number (EIN) from the IRS- All businesses that have

employees need a federal EIN, which serves as the business’ tax ID.

Register for State and local Taxes – States mandate payroll taxes, and you will need to pay these

on behalf of your employee.

Determine your Federal (FUTA) and State Unemployment Tax (SUTA) rates – we have two

great resources on this for more information – here and here.

Buy Worker’s Comp Insurance (required in most states) – This is, in general, required of all

employers in all states to protect employees from injuries sustained on the job. We tell you more

in our guide here.

Post required notices and posters around the workplace (if you have a physical space)

 

Phase 2: The Employee’s First Day

Collect a signed Federal W-4 form for tax withholding (available here) – This does not need to

be submitted to the IRS, but you should store it in a paper file or electronically in a personnel file

Collect a signed State W-4 form for tax withholding (in some states only: check here) – store it in

a paper file or electronically in a personnel file.

Get direct deposit information from employee from a voided check (if applicable)

 

Phase 3: The Employee’s First 3 Weeks of Employment

Once your employee starts, you need to move quickly on the final steps for them.

Collect a signed I-9 Form for work eligibility verification (within 3 days of employee’s start

date)—You’ll want to make sure the employee can verify their identity and eligibility to work in

the United States with a passport or two forms of identification. Accepted identification forms

are detailed here.

Register your employee in your state’s New Hire Reporting Program (within 20 days)—A new

requirement since 1996, you will want to make sure that you report all new or rehired employees

to your state.

For a more detailed rundown of these steps, including links to forms and other resources, check

out our New Hire Checklist.

STEPS

 Step 1: Basic information

Step 2: Adding employees

Step 3: Federal tax setup

Step 4: State tax setup

Step 5: Bank account setup

Step 6: Choose your pay period

Step 7: Sign company forms

Step 8: Purchase workers compensation insurance

(optional) Adding benefits