Do I need an accountant to do this, or can I handle it myself?

The playbook is written for owners to follow on their own, one step at a time. It walks you through registering for state withholding and unemployment accounts, binding workers’ compensation, collecting Form W-4 and Form I-9, and running the first pay cycle, so you can get through it without hiring an accountant. Where state rules vary, the step tells you how to look up your specific requirements.

How much of this can I do online?

Almost all of it. You apply for or confirm your EIN, register for state employer tax accounts, verify the employee’s Social Security number, and set up your payroll service through online portals. The parts that can’t be done online are collecting signed forms from the employee and displaying the required workplace posters.

Do I really need workers’ compensation insurance for just one employee?

The guide treats workers’ compensation as a required part of hiring your first W-2 employee, not an optional extra. It walks you through determining your state’s requirements, getting a quote, binding a policy, and storing the certificate of insurance, and it includes the deposit in its cost estimate.

I’m not sure what my state requires — will this still work for me?

Yes. The guide is written for a general audience across all states, and wherever state rules vary, the step tells you how to look up your specific requirements. That includes state withholding, unemployment insurance, separate disability or paid family leave accounts, and state-specific tax withholding forms.

What happens after the first paycheck — is that covered too?

The guide runs through the first pay cycle, tax deposits, and the new-hire report, then sets up the ongoing rhythm: mandatory federal and state workplace posters, a compliance calendar for quarterly and annual filing deadlines, and a compliant system for storing Forms I-9, W-4, and payroll records. Ongoing payroll processing beyond the first cycle is not covered.

EN3 versions

Hire your first W-2 employee without a compliance gap

A first employee legally on payroll – state employer tax accounts registered, federal EIN confirmed for payroll, Form W-4 and I-9 collected and stored correctly, workers’ comp bound, new-hire reporting filed, a payroll system running with the right deposit schedule, and mandatory postings and policies in place.

Fby Finito HQEchipa Finito

Created 2 months agoUpdated 2 months ago

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Who it's for

This guide is for U.S. small business owners or sole proprietors who have only worked with independent contractors or paid themselves and are now hiring their first W-2 employee. It assumes you have no existing payroll tax accounts, no workers’ compensation policy, and no payroll system in place. It is written for a general audience across all states; where state rules vary, the step tells you how to look up your specific requirements.

About this playbook

This playbook walks you through every administrative step required to put your first W-2 employee on payroll without missing a compliance deadline or exposing your business to penalties. You will register for state withholding and unemployment accounts, secure workers’ compensation coverage, collect the right tax and identity forms, set up a payroll system, run the first pay cycle, and file the new-hire report. It does not cover employee recruiting, offer letters, salary negotiation, benefit plan design, or ongoing payroll processing beyond the first cycle. The steps are ordered so that waiting periods for policy binding and account approvals happen as early as possible.

What you'll do, step by stepFree preview

6 phases · 21 steps

Only a sample is open: 4 of 21 steps can be read in full. The rest unlock when you buy.

Phase 1: Register your business for employer tax accounts
4 steps
Phase 2: Bind workers’ compensation insurance
3 steps
Phase 3: Collect employee tax and identity documents
4 steps
Phase 4: Set up payroll processing and determine deposit schedules
4 steps
Phase 5: Run first payroll and file the new-hire report
3 steps
Phase 6: Finalize compliance and establish the ongoing rhythm
3 steps

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Details

Estimated duration9 hours

Steps21

Estimated budget$500–$2,500 for workers’ compensation deposit, payroll service setup, and

What you need first

You must have a registered business entity (LLC, corporation, or sole proprietorship) with a physical address in the state where the employee will work. You need a business bank account capable of making ACH or check payments for tax deposits. You should already have a Federal Employer Identification Number (EIN) for the business, or be ready to apply for one online. You need the employee’s full legal name, address, Social Security number, and start date before beginning Phase 3.