Hiring your first employee is exciting—but it also means it’s time to get serious about payroll. And if you're thinking, “Where do I even start?”—you're not alone.
Between tax forms, pay schedules, and staying compliant with state and federal laws, setting up payroll can feel overwhelming. But it doesn’t have to be.
In this guide, we’ll walk you through everything you need to know to set up payroll confidently—and avoid common (and costly) mistakes.
Before you run your first paycheck, make sure you’ve set up the foundation correctly. Here's what you need:
Think of this as your business's Social Security number. You’ll need it to report taxes and forms to the IRS.
You can apply online through the IRS website for free.
Each state has its own rules for income tax and unemployment insurance. You’ll need to register with your state’s Department of Revenue and state unemployment agency to handle tax withholding and reporting.
Most states require you to carry workers’ comp, even if you only have one employee. This protects you and your team in case of a workplace injury.
Before you can pay anyone, you need some paperwork from your employees:
Keep these documents organized and secure—they’ll be important at year-end and during audits.
Tip: Bi-weekly pay is the most common for small businesses and makes budgeting easier.
Make sure your schedule follows state labor laws—some states have rules about minimum pay frequency.
This is where many small business owners get stuck. You have three main options:
Good for very small teams (1–2 employees), but comes with a high risk of mistakes.
You’ll need to calculate taxes, fill out forms, and file on time—every pay period.
A great middle-ground. It automates tax calculations, filings, and direct deposits. You’ll still be in the driver’s seat, but with fewer headaches.
Want payroll off your plate completely? A provider like Cadence handles everything: payments, taxes, filings, year-end forms, and even questions from employees.
This is a great fit for business owners who want to focus on running their business—not on chasing down tax deadlines.
For every paycheck, you’ll need to calculate and withhold:
You also need to match the FICA and unemployment tax amounts as an employer. These amounts must be deposited with the IRS and state agencies on a regular schedule.
Throughout the year, you’re responsible for filing reports and making deposits. Here’s what that includes:
Missing these deadlines can lead to fines, so it’s important to either automate them or keep a clear calendar.
Payroll isn’t just about cutting checks. You’re responsible for:
If you’re not confident in these areas, outsourcing payroll to a partner like Cadence can give you peace of mind and save time (and money) in the long run.
Getting payroll right the first time matters—but it doesn’t have to be intimidating. With the right setup and a reliable partner, you can pay your people, stay compliant, and keep your business moving forward.
Whether you're hiring your first employee or your fifteenth, a simplified solution like Cadence makes sure payroll isn’t what keeps you up at night
We’re here to help. Schedule a call with Cadence to get expert support, the right tools, and confidence you’re doing it the right way—without the stress.
Keep reading. Never stop learning.
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