Payroll for your first employee 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 tax agencies, setting up withholding correctly, and meeting strict deposit and reporting deadlines. Get the sequence right from the start and the ongoing process is straightforward.
Get your employer identification numbers
Before you can run a single payroll, you need two things: a federal Employer Identification Number (EIN) and a state tax account number for every state where you have employees.
Apply for your EIN through the IRS website — the process is free and you get the number immediately online. Once you have it, register with your state's department of revenue or department of labor (sometimes both) to get a state withholding account and a state unemployment insurance (SUI) account. Each state has its own portal and timeline, so do this early.
Collect the right forms from your employee
On or before their first day, every new hire must complete two forms:
Form W-4 (Employee's Withholding Certificate). This tells you how much federal income tax to withhold. Federal income tax is progressive, running from 10% to 37% depending on the employee's taxable income and filing status. The W-4 itself does the heavy lifting — follow its instructions and the IRS withholding tables rather than trying to calculate brackets manually.
Form I-9 (Employment Eligibility Verification). Required by federal law to confirm the employee is authorized to work in the United States. You must complete Section 2 within three business days of the employee's start date and keep the form on file. You do not send it anywhere — it is an internal record subject to audit.
Many states also have their own withholding certificate. Check whether your state requires one in addition to the federal W-4.
Understand what you must withhold and pay
Every payroll involves two separate buckets: amounts withheld from the employee's wages, and employer-side contributions you pay yourself.
Employee withholdings:
- Federal income tax — calculated from the W-4 and the IRS withholding tables
- Social Security — 6.2% of gross wages up to the annual wage base
- Medicare — 1.45% of all gross wages, with no cap
- An Additional Medicare Tax of 0.9% applies to wages above certain thresholds, though this is the employee's obligation — you withhold it once wages pass the threshold
- State income tax where applicable — several states, including Texas, Florida, and Washington, have no state income tax, so this line may be zero
Employer contributions:
- Social Security — you match the employee's 6.2%
- Medicare — you match the employee's 1.45%
- Federal Unemployment Tax (FUTA) — a separate employer-only tax; no withholding from the employee
- State Unemployment Insurance (SUI) — rates vary by state and by your claims history
The combined employer cost on top of gross wages is meaningful. Budget for it before you agree on a salary.
Deposit taxes and file the right returns
The IRS sets deposit schedules — monthly or semi-weekly — based on your total tax liability in a lookback period. As a brand-new employer with no lookback history, you will generally start on the monthly schedule, meaning payroll taxes are due by the 15th of the following month. Missing deposit deadlines triggers penalties, so set a calendar reminder from day one.
Your main federal filing obligations are:
- Form 941 — filed quarterly, reporting wages paid, federal income tax withheld, and the employee and employer shares of FICA
- Form W-2 — sent to the employee and filed with the Social Security Administration by 31 January of the following year, reporting annual wages and all withholdings
- Form W-3 — the transmittal form that accompanies W-2s to the SSA
State filing schedules vary. Most states require quarterly wage reports alongside your SUI payments.
Know the baseline employment rules
Employment in the United States is generally "at-will," meaning either party can end the relationship at any time without cause, unless a contract says otherwise. There is no federal statutory paid vacation or sick leave, so any time-off benefits you offer are discretionary — though some states and cities mandate paid sick leave, so check local law.
If you are in California, note that non-compete clauses are broadly prohibited, which affects what you can put in an offer letter or employment agreement.
Classify your worker correctly from the start. If the relationship meets the IRS and Department of Labor criteria for an employee, treat them as one. Misclassifying an employee as an independent contractor (who would receive a 1099-NEC rather than a W-2) exposes you to back taxes, penalties, and interest.
If you are managing payroll across multiple states or countries at the same time, the coordination overhead multiplies quickly — how Mellow runs payroll across six countries gives a practical picture of what that looks like in practice.
---
Run HR and payroll in United States with Mellow
Mellow brings HR, payroll and 12 AI agents into one platform — built to handle United States properly, with payroll included, from £4 per employee per month. The AI agents don't just answer questions; they generate contracts, run cost estimates and draft letters for you.
- United States payroll software
[Start a free trial →](/register)