Do I need to register for payroll taxes before hiring anyone?
Last updated September 27, 2026
Find out when payroll tax registration matters and what to do before you pay an employee or yourself through payroll.
Usually, you do not need to register for payroll taxes until you are actually going to pay employees, or until your business structure requires you to run payroll for yourself. Forming an LLC or getting an EIN does not automatically mean you have payroll tax filings. Payroll becomes a separate responsibility when wages are paid. That said, you should not wait until after someone has already started work to figure it out, because payroll setup can involve federal, state, and sometimes local accounts.
Steps
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Decide whether you are hiring an employee or a contractor. Employees and contractors are handled differently. If you control how, when, and where the work is done, do not assume the person is a contractor just because it feels easier.
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Check whether you will pay yourself through payroll. Many sole proprietors and single-member LLC owners do not pay themselves wages. Some corporations and LLCs taxed as corporations often do use payroll for owner pay. Your tax election matters.
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Get your EIN before payroll setup. Payroll systems and tax accounts typically use your EIN to identify the business. If you do not have employees yet, having an EIN does not mean you must run payroll.
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Register for required payroll tax accounts before wages are paid. This may include federal payroll deposits, state withholding, unemployment insurance, and any local requirements that apply where your employee works.
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Choose how payroll will be handled. You can use payroll software, a payroll provider, or a professional. Payroll has deadlines and forms, so manual tracking can get risky quickly.
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Keep worker records from day one. Save hiring documents, tax forms, wage details, hours if applicable, benefits information, and payment records.
If you are still stuck
Use your Stratify roadmap to see whether payroll belongs in your current setup or a later stage. If you are unsure whether someone is an employee, contractor, or owner on payroll, ask the AI coach before you pay them.