Payroll Services for One Employee

The cost of running payroll for one employee can vary based on factors like whether you manage it yourself or outsource to a provider. Handling payroll in-house may seem like you’re saving money, but it requires time for things like tax filings, while outsourcing can streamline the process and free up time for other business priorities.

Be cautious of hidden fees with providers advertising low pricing, as additional costs can add up quickly.

Choosing between putting yourself on payroll as your first employee or using an owner's draw depends on your business structure and financial goals. Putting yourself on payroll can provide consistent income, and you’ll be making sure to withhold taxes, which can simplify your personal tax filing. On the other hand, an owner’s draw may offer more flexibility, allowing you to take funds as needed, but you’ll need to manage self-employment taxes and quarterly estimates.

Managing payroll for one employee may seem simple, but keeping up with changing compliance requirements can be time-consuming. With Paychex, setting up payroll is fast and easy. Our all-in-one platform and team of specialists handle tasks like tax calculations, filings, and compliance monitoring so you can focus on growing your business.

Your payroll schedule, including the pay frequency and date, will tell you when to run your first payroll. When establishing your payroll schedule, consider the following:

• Your state’s requirements
• Your business’s cash flow
• Employee preferences

Before running payroll, small businesses must obtain an EIN from the IRS and understand state and federal employment laws, including wage payment and tax requirements. Decide on a payroll schedule that aligns with your cash flow and local tax rules. Collect employee information, including W-4 forms for federal tax withholding and any required state forms. Calculate wages and tax withholdings using up-to-date IRS and local tax guidelines. Finally, issue payments and file payroll taxes with the IRS and relevant tax authorities. If you work with a payroll provider, they can assist with some or all of these tasks, saving you time and helping with compliance.

To run your first payroll, you must have the following:

• Employer Identification Number (EIN)
• Understanding of employment laws
• Payroll schedule
• Employee information
• Wage and tax calculations
• Filing and payment system
• Payroll provider support (optional)