To register for payroll tax, apply for an Employer Identification Number from the IRS, enroll in the Electronic Federal Tax Payment System, and register with your state’s revenue and unemployment agencies for withholding and unemployment insurance accounts. Federal registration can usually be finished online in one sitting. State timelines vary, so start early enough that every account is active before your first payday.
Get Your Employer Identification Number First
The EIN is a nine-digit number the IRS assigns to your business for tax filing and reporting, and it is the prerequisite for every other step. You cannot enroll in EFTPS, register with a state agency, make a federal deposit, or file a return without it.1Internal Revenue Service. About Form SS-4, Application for Employer Identification Number (EIN)
You apply on Form SS-4. Applying online through the IRS website is the fastest option and issues your EIN immediately. You can also apply by fax or mail, or by phone if you’re outside the United States.2Internal Revenue Service. Instructions for Form SS-4 (12/2025) – Section: General Instructions
The application asks for your legal business name, physical address, and entity type (corporation, LLC, partnership, and so on). It also asks for the name and Social Security number or taxpayer identification number of the “responsible party,” meaning the person who controls the business’s funds and financial decisions.3Internal Revenue Service. Employer Identification Number You’ll give the date you first paid or expect to pay wages, and an estimate of how many employees you expect. Save the EIN confirmation letter; every step that follows depends on it.
Enroll in EFTPS Right Away
The Electronic Federal Tax Payment System is the free Treasury service you’ll use to make every federal payroll tax deposit.4Internal Revenue Service. EFTPS: The Electronic Federal Tax Payment System Enrollment is separate from getting your EIN, and you must be enrolled before you can pay.
To enroll, go to the EFTPS website and complete the form with your EIN, business name, and bank account information. The IRS validates your data and mails a Personal Identification Number by U.S. Mail within five to seven business days.5Electronic Federal Tax Payment System. Welcome to EFTPS Online After the PIN arrives, you’ll also verify your identity through ID.me or Login.gov before you can make a payment.
Because of the mailing delay, enroll as soon as your EIN comes through. Waiting until close to your first deposit is how new employers miss deadlines.
Register With Your State
You typically need two state accounts on top of federal registration: one for state income tax withholding, and one for state unemployment insurance. Most states run these through separate agencies, often a department of revenue for withholding and a department of labor or employment security commission for unemployment. Some states let you set up both through a single online business portal.
During state registration, expect to provide your EIN, legal business name, address, entity type, and an industry classification code (a NAICS code). The state uses the NAICS code to assign your initial unemployment insurance tax rate based on your industry’s risk profile. New employers usually get a default rate for the first two to three years, until the state has enough claims history to calculate an experience-based rate.
State unemployment taxable wage bases range from $7,000 in some states to over $78,000 in others, so the actual cost of this tax depends heavily on where your employees work. Check with your state unemployment agency for the current wage base and the rate you’ve been assigned.
Set Up New-Hire Paperwork and Reporting
Registration is not finished when your accounts are open. Two forms have to be in every employee’s file before you run their first paycheck, and one report has to go to your state.
Form W-4, the Employee’s Withholding Certificate, tells you how much federal income tax to withhold from each paycheck. If an employee doesn’t turn one in, you must withhold as if they are single with no other adjustments, which is usually more than the employee expects.6Internal Revenue Service. Form W-4, Employees Withholding Certificate (2026)
Form I-9, Employment Eligibility Verification, is how you confirm the employee is authorized to work in the United States. The employee completes their section on or before their first day, and you review their identity and work-authorization documents and complete your section within three business days of the start date.7U.S. Citizenship and Immigration Services. I-9, Employment Eligibility Verification
Federal law also requires you to report every new hire to a State Directory of New Hires. The report includes the employee’s name, address, and Social Security number, the date they first performed work, and your business name, address, and EIN.8Office of the Law Revision Counsel. 42 USC 653a – State Directory of New Hires Most states give you 20 days from the hire date, though some are shorter. Multistate employers who file electronically can pick one state to receive all their new-hire reports. States use this data mainly to enforce child support orders and to catch fraudulent benefits claims.
Know What You’ll Owe and When
Your registration decisions make more sense once you know what federal payroll taxes you’re signing up to collect and pay.
Social Security tax runs at 6.2% on wages up to $184,500 in 2026, paid by both you and the employee. Medicare tax is 1.45% on all wages with no cap, again paid by both sides. That is 7.65% withheld from the paycheck and a matching 7.65% paid by you.9Social Security Administration. Contribution and Benefit Base An additional 0.9% Medicare tax kicks in on wages above $200,000 for the year; you withhold it once the employee crosses that line, but you don’t match it.10Internal Revenue Service. Instructions for Form 8959
Federal Unemployment Tax (FUTA) is entirely on you; nothing comes out of employee pay. The rate is 6.0% on the first $7,000 of each employee’s annual wages, but paying your state unemployment tax on time earns a credit of up to 5.4%, so the effective rate is usually 0.6%. You’re subject to FUTA once you’ve paid $1,500 in wages in a calendar quarter (current or prior year), or had one or more employees for part of a day in 20 or more different weeks. FUTA is reported annually on Form 940.11Internal Revenue Service. Topic No. 759, Form 940 – Employers Annual Federal Unemployment (FUTA) Tax Return
Deposits happen on one of two schedules the IRS assigns based on your history. Report $50,000 or less in employment taxes during the lookback period and you’re a monthly depositor, paying by the 15th of the month after each payday month. Report more than $50,000 and you’re semi-weekly, paying by the Wednesday after Wednesday–Friday paydays and by the Friday after Saturday–Tuesday paydays.12Internal Revenue Service. Publication 15, Employers Tax Guide New employers with no lookback history are monthly depositors by default. If you ever accumulate $100,000 or more in taxes on a single day, you deposit by the next business day.13Internal Revenue Service. Employment Tax Due Dates
Most employers file Form 941 quarterly, with returns due April 30, July 31, October 31, and January 31. Once you file your first 941, you keep filing every quarter, even quarters with no wages, unless you file a final return or qualify as a seasonal employer.13Internal Revenue Service. Employment Tax Due Dates
Registration Only Applies to Employees
Payroll tax registration only matters for the people you pay who are actually employees. If a worker is a legitimate independent contractor, none of this applies to them, and misclassifying an employee as a contractor makes you liable for the employment taxes you should have withheld, plus penalties.14Internal Revenue Service. Independent Contractor (Self-Employed) or Employee?
The IRS looks at behavioral control (whether you direct how the work is done), financial control (whether the worker has their own investment in tools and can profit or lose independently), and the type of relationship (benefits, open-ended engagement, whether the work is core to your business).15Internal Revenue Service. Type of Relationship A contract calling someone an independent contractor does not settle the question; the working relationship does. If you misclassify but filed the required 1099 forms, you owe 1.5% of the worker’s wages for income tax withholding and 20% of the employee share of Social Security and Medicare. Without the 1099s, those rates double to 3% and 40%.16Office of the Law Revision Counsel. 26 U.S. Code 3509 – Determination of Employers Liability for Certain Employment Taxes
What Happens If You Don’t Register or Don’t Pay
Skipping registration or missing deposits carries penalties that reach past the business itself.
A late return costs 5% of the unpaid tax for each month or partial month it’s late, up to 25%.17Internal Revenue Service. Failure to File Penalty
Late deposits are graduated by how late they are:
- 1–5 days late: 2% of the unpaid deposit
- 6–15 days late: 5% of the unpaid deposit
- More than 15 days late: 10% of the unpaid deposit
- More than 10 days after a first IRS notice, or upon a demand for immediate payment: 15% of the unpaid deposit18Internal Revenue Service. Failure to Deposit Penalty
The most serious consequence is the Trust Fund Recovery Penalty. Social Security, Medicare, and income taxes you withhold from paychecks are “trust fund” taxes because you hold them for the government. If a responsible person (any officer, employee, director, or shareholder with authority over the business’s finances) willfully fails to turn that money over, the IRS can assess the penalty against that individual personally.19Internal Revenue Service. Employment Taxes and the Trust Fund Recovery Penalty (TFRP)
The penalty equals the full amount of unpaid trust fund taxes, and the IRS can collect it from personal assets through liens and levies even while the business is still operating. “Willfully” does not require bad intent. Choosing to pay other creditors instead of the IRS when cash is tight meets the standard.19Internal Revenue Service. Employment Taxes and the Trust Fund Recovery Penalty (TFRP) That is the reason to get every account open, every credential in hand, and every deposit scheduled before your first payday, not after.