- Classify honestly: W-2 or 1099.Driven by behavioral control, financial control and the relationship, not by what you call it. Some states, including California, New Jersey and Massachusetts, apply a stricter ABC test that assumes employee unless you can prove otherwise.
- Get an EIN.Free, online, same day. You cannot run payroll without it.
- Register with your state.State withholding and state unemployment insurance are separate registrations from the federal one.
- Buy workers compensation.Required in nearly every state, from the first employee in California and New York. Texas lets private employers opt out, at the cost of key defenses in injury suits. Going without it elsewhere is one of the more expensive gambles available.
- Paperwork on or before day one.Form I-9 for work eligibility, with the deadlines below. Form W-4 for withholding. Your state new hire report, usually due within twenty days.
- Then the ongoing filings.Form 941 by the last day of the month after each quarter, Form 940 annually, W-2s by January 31, plus whatever your state wants.
EIN from the IRS. Free, online, same day.
Arizona withholding and unemployment insurance registration. Separate from the federal one, and separate from each other.
Workers compensation. Required in Arizona, and going without it is one of the more expensive gambles available.
Form I-9 within three business days of their start, and Form W-4 for withholding.
Arizona new hire report within twenty days.
Then ongoing: Form 941 quarterly, Form 940 annually, W-2 in January.
Real cost is $62,479 before state unemployment, workers comp and benefits: $3,596 Social Security, $841 Medicare and $42 federal unemployment on top of the $58,000 (As of Oct 2026). Want MARCUS to model the rest?
Advanced engine, and it named the Arizona-specific filings rather than generic ones.
Form I-9 and E-Verify
The employee completes Section 1 no later than their first day of work. You complete Section 2 within three business days after that first day, or on day one if the job lasts fewer than three business days. Florida private employers with 25 or more employees must also run E-Verify within 3 business days after paid work begins. As of Oct 2026.
8 CFR 274a.2(b)(1)(i) to (iii); Fla. Stat. sec. 448.095(2)
Payroll taxes on top of wages
For 2026, employer Social Security is 6.2% of wages up to $184,500 and Medicare is 1.45% with no cap, and you withhold the same again from the employee. Federal unemployment tax is 6.0% on the first $7,000 of each employee's wages, usually 0.6% after the state credit, and more in a credit-reduction state. State unemployment comes on top, at a rate your state assigns. As of Oct 2026.
IRS Publication 15, Employer's Tax Guide
| Wages | $58,000 |
| Employer Social Security at 6.2% | $3,596 |
| Employer Medicare at 1.45% | $841 |
| Federal unemployment: 0.6% of the first $7,000 | $42 |
| Cost before state unemployment, workers comp and benefits | $62,479 |
| Added to the wage so far | $4,479 |
About 7.7% on top of pay, before your state's unemployment rate, your workers comp premium and any time off or benefits you offer.
GRACE covers the hiring, MARCUS covers payroll and withholding, IVY covers state registration. Worth asking all three in one conversation.
I want to hire my first W-2 employee rather than use contractors. My business is [what you do] in [state] with [how many] people. Tell me what changes for me and everything I need in place before their first day.
Every lesson ends with a question to hand to a Greymill specialist, who answers with what it knows about your business.
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