Payroll in a week: accounts, software, first check

What has to exist before the first paycheck

Before you can legally pay anyone, four things need to exist: a federal Employer Identification Number, state withholding and unemployment tax accounts, a completed Form I-9 and Form W-4 for the new hire, and a new-hire report filed with your state within its deadline. Skip any one and the first check either can't run or creates a compliance gap.

The EIN is free and instant through the IRS's online application if you don't already have one for the practice. State registration is a separate step — most states let you register for withholding and unemployment insurance in the same online session, and it generates the account numbers your payroll software needs before it can calculate a check. Your state's hiring triggers — the point at which withholding, SUTA, and new-hire reporting all become mandatory — usually fire at once, the moment you bring on a first W-2 employee. Form I-9 has a hard deadline: the employee completes Section 1 by their first day, and you complete Section 2, having examined original identity and work-authorization documents, within three business days of the start date. Form W-4 sets federal withholding; most states have their own version. File the new-hire report — most states require it within 20 days of the start date, some sooner — because it feeds the state's child-support enforcement matching system, not payroll math, but a missed filing generates a penalty letter disproportionate to the actual risk it prevents.

If you're still deciding whether the first hire should be an employee at all, that's a separate question from this checklist — this page assumes you've decided and are now running the mechanics.

Payroll software or a payroll service — decide before day one

Three ways to run payroll exist for a one-employee practice: a self-service payroll platform, a full-service payroll or PEO arrangement, or manual calculation. For a first hire, self-service or full-service is almost always the right call — manual calculation of federal withholding, FICA, and state tax by hand is error-prone, and the errors compound at year-end filing.

A self-service platform takes hours or a salary figure and computes the withholding, cuts the check or files the direct deposit, and generally handles quarterly and annual tax filings for a flat or per-employee monthly fee. A full-service arrangement or PEO co-employs the worker, taking on more of the HR compliance surface — workers' comp administration, benefits enrollment, handbook templates — at a higher per-employee cost, which can be worth it for an owner with no HR background at all. Whichever you pick, confirm it handles your state's specific filings (the SUTA return, year-end W-2 issuance) rather than treating those as a separate task you own.

Classify the role before you set the pay rate

Before quoting a pay rate, classify the position as exempt or non-exempt under the Fair Labor Standards Act — the classification determines whether the role is entitled to overtime, and getting it wrong is one of the most common wage-and-hour claims a small employer faces 1Ref 1U.S. Department of Labor (2026).Fair Labor Standards Act.Supports FLSA exempt/non-exempt classification and the federal minimum-wage and overtime baseline for a first hire..

Front-desk and administrative roles are almost always non-exempt, meaning overtime at time-and-a-half over 40 hours in a workweek applies regardless of job title or whether the role is paid hourly or salaried. Exempt classification requires meeting both a salary-basis test and a duties test (executive, administrative, or professional) — a title like "office manager" does not by itself make a role exempt. State law can set a higher minimum wage or overtime threshold than federal law; the FLSA is the floor, not the ceiling 1Ref 1U.S. Department of Labor (2026).Fair Labor Standards Act.Supports FLSA exempt/non-exempt classification and the federal minimum-wage and overtime baseline for a first hire..

Screen the hire before you run the first check

Two federal databases exist specifically so a healthcare practice can check whether a hire is barred from Medicare, Medicaid, and other federal health programs before that person touches billing, scheduling, or patient contact — the OIG's List of Excluded Individuals/Entities and SAM.gov — and running both belongs before the first check, not after 2Ref 2HHS Office of Inspector General (2026).Exclusions Program.Supports the pre-hire and ongoing exclusion-screening obligation via the OIG LEIE before running the first payroll check.3Ref 3U.S. General Services Administration (2026).SAM.gov.Supports SAM.gov as the complementary federal exclusion and debarment check alongside the OIG LEIE..

An OIG LEIE query is free and searchable by name; a hit means no federal program may pay for services that person furnishes, which extends to administrative and billing roles, not only clinical ones 2Ref 2HHS Office of Inspector General (2026).Exclusions Program.Supports the pre-hire and ongoing exclusion-screening obligation via the OIG LEIE before running the first payroll check.. SAM.gov is the complementary federal exclusion and debarment database maintained by GSA 3Ref 3U.S. General Services Administration (2026).SAM.gov.Supports SAM.gov as the complementary federal exclusion and debarment check alongside the OIG LEIE.. Screening isn't a one-time gate — it's a recurring obligation for the life of the employment — but this step is about the pre-hire check specifically. Keep a dated screenshot or printout as your documentation; it's the artifact an auditor or a payer credentialing reviewer will ask for.

Which employment laws actually apply at one employee

Federal anti-discrimination law mostly doesn't reach a one-employee practice yet — Title VII and the ADA require 15 or more employees, the ADEA requires 20 — but state law almost always does, often starting at employee number one, which is why the safer assumption is that some employment law already applies rather than none 4Ref 4U.S. Equal Employment Opportunity Commission (2026).Employers.Supports the federal EEO employee-count thresholds and why state employment law reaches a one-employee practice first..

Most states apply their own anti-discrimination statute, minimum wage, and workers' compensation mandate from the first hire, regardless of the federal thresholds 4Ref 4U.S. Equal Employment Opportunity Commission (2026).Employers.Supports the federal EEO employee-count thresholds and why state employment law reaches a one-employee practice first.. Workers' comp coverage is typically mandatory the moment you have a single employee in most states, and the penalty for going without it is not a fine you can budget around — check your state's requirement directly rather than assuming a grace period exists. None of this touches how you pay yourself: owner payroll runs through a different mechanism than employee payroll, whether you're paid via draw, distribution, or a reasonable-salary W-2 check.

Running the first check: what withholding actually happens

The first paycheck runs four calculations at once: federal income tax withholding from the W-4, the employee's half of FICA (Social Security and Medicare), any state income tax withholding, and — separately, not deducted from the check — the employer's own payroll tax obligations.

FICA is split evenly: 6.2% Social Security up to the annual wage base and 1.45% Medicare, each matched by the employer. SUTA isn't withheld from the employee's check at all — unemployment taxes are an employer-paid cost layered on top of wages, calculated against your state's taxable wage base and your assigned experience rate. FUTA is a small additional federal unemployment tax, also employer-paid, mostly offset by a credit for states current on their SUTA payments. If your first hire happens to be a spouse or adult child, family on payroll changes some of the FICA and FUTA math — treat it as its own question rather than assuming the standard rules apply unmodified. Whatever platform you chose above should compute all of this automatically once account numbers and the W-4 and state forms are entered — check the first pay stub by hand once, against the numbers you expect, before trusting the automation going forward.

A one-week setup timeline

Realistically, payroll setup for a first hire compresses into about a week if you start the EIN and state registration the day you extend the offer, rather than the day the person starts — the table below lays out a workable sequence, though several steps run in parallel rather than strictly one after another.

None of these steps depends strictly on the others finishing first — running them in parallel across the week, rather than in sequence, is what actually gets a first paycheck out on time. Payroll setup is only the compliance half of bringing someone on; the fuller onboarding sequence — training, systems access, HIPAA orientation — runs alongside it, not after it.