Classify each worker correctly as employee or independent contractor
Get an EIN from the IRS
Register for federal, state, and local payroll tax accounts
Choose a payroll schedule
Collect Form W-4 from each employee
Collect state withholding forms if required
Set up employee direct deposit or payment method
Track hours worked for hourly employees
Calculate gross pay
Calculate overtime, bonuses, commissions, and paid leave
Deduct federal income tax
Deduct Social Security and Medicare taxes
Deduct state and local taxes if applicable
Deduct benefits, garnishments, and other authorized deductions
Calculate net pay
Pay employees on schedule
Deposit payroll taxes by required deadlines
File quarterly payroll tax forms
File annual payroll tax forms
Issue W-2 forms to employees
Issue 1099 forms to contractors if required
Keep payroll records organized and secure
Reconcile payroll reports regularly
Use payroll software or a payroll service if needed