Employer registration and set-up in the United States
Reviewed by Mellow Editorial Team, HR & payroll content team
Hiring your first employee in the United States means registering with several federal and state agencies before you run a single paycheck. Get the registrations wrong or out of order and you face penalties, delayed deposits, and potential liability — so it pays to understand exactly what is required.
Get your federal employer identification number first
Everything else depends on this. An Employer Identification Number (EIN) is issued by the IRS and functions as your business's tax ID. You need it to file payroll tax returns, open a business bank account, and register with most state agencies.
Apply online through the IRS website — the process takes about 15 minutes and the EIN is issued immediately. You can also apply by fax or mail, but online is the fastest route. There is no fee.
If your business structure changes materially — for example, a sole proprietorship that incorporates — the IRS may require a new EIN, so confirm this before you hire under an existing number.
Register with the IRS for employment tax obligations
Once you have an EIN, you are automatically set up to file federal employment taxes. Your core obligations are:
- Federal income tax withholding. Every new hire completes Form W-4, which tells you how much federal income tax to withhold. Rates follow progressive brackets from 10% to 37%. You do not deposit a flat amount — the W-4 plus IRS withholding tables determine the figure.
- FICA taxes. You withhold Social Security at 6.2% of wages up to the annual wage base and Medicare at 1.45% on all wages. Employees who earn above the high-earner threshold also owe an Additional Medicare Tax of 0.9%, which you withhold but do not match. You do match the base Social Security and Medicare amounts dollar for dollar as the employer.
- Federal Unemployment Tax (FUTA). This is an employer-only tax filed annually on Form 940. A credit is available if you pay state unemployment tax on time, which most employers do.
Deposit frequency — monthly or semi-weekly — depends on your total tax liability in a lookback period. The IRS assigns this based on your filings; check your classification before your first payroll runs.
Set up state and local registrations
Every state where you have employees requires its own registration. The specific agencies vary, but the common steps are:
1. State income tax withholding account. Required in most states. Texas, Florida, Washington, and a handful of others impose no state income tax, so no withholding account is needed there. In states that do have income tax — California, New York, Illinois, and most others — you register with the state revenue or taxation department and receive a withholding account number.
2. State unemployment insurance (SUI) account. Required in every state. Register with the state workforce or labor department. Your SUI rate is assigned initially as a new-employer rate; it adjusts over time based on your claims history.
3. Local taxes. Some cities and counties — notably in Pennsylvania, Ohio, Kentucky, and New York City — levy their own payroll or earned-income taxes. Check the municipality where employees work and where they live, because both can matter.
If you hire remotely and employees work from different states, you may need to register in each of those states. This is one of the most common compliance gaps for growing companies.
Report new hires and verify work authorization
Federal law requires you to report every new hire to the state's new-hire reporting agency within 20 days of the first day of work (some states have shorter windows). These reports feed the National Directory of New Hires, which is used to enforce child support orders.
You also must complete Form I-9 to verify that each employee is authorized to work in the United States. The employee completes their section on or before their first day; you complete the employer section within three business days of the start date. Keep I-9s on file for the duration of employment plus the applicable retention period.
E-Verify is a federal system that cross-checks I-9 information against government databases. It is mandatory for federal contractors and in certain states; it is voluntary for most private employers, but adoption has grown.
Know your ongoing reporting calendar
Registration is a one-time task, but the reporting obligations that follow are recurring:
- Form 941 (Employer's Quarterly Federal Tax Return) is due by the last day of the month following each quarter — so April 30, July 31, October 31, and January 31.
- Form W-2 must be furnished to employees and filed with the Social Security Administration by January 31 each year.
- If you engage independent contractors, Form 1099-NEC is also due by January 31 for any contractor paid $600 or more in the year.
Missing these deadlines triggers escalating penalties, so build the dates into your payroll calendar from day one. If your business operates across multiple states, tracking separate state filings alongside federal ones is a significant administrative commitment — many employers use a payroll provider or dedicated global payroll platform to manage it.
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