How often should I run payroll, and what schedule is standard?

There is no single standard payroll schedule that applies nationwide. Pay frequency is set by state law and varies widely depending on where the business operates. The U.S. Department of Labor notes that employers must check with their relevant state labor office for official information on payday requirements. For example, California requires wages to be paid at least twice per calendar month on days designated in advance. Colorado requires monthly payments. Connecticut requires weekly payments unless a longer interval is approved by the labor commissioner. You cannot simply choose a convenient schedule without first verifying the legal minimum frequency required by your specific state.

What paperwork is required to pay my first employee?

Hiring an employee triggers immediate paperwork obligations that must be completed accurately. All U.S. employers must properly complete Form I-9 for every individual they hire for employment in the United States. This verifies the identity and employment authorization of the person hired. You also need to gather the employee's name and Social Security Number to enter correctly on Form W-2 at the end of the year.

Tax withholding requires its own documentation right at the start. Employers must ask all new employees to give them a signed Form W-4 when they start work. Make the form effective with the first wage payment. This form determines how much federal income tax to withhold from the employee's pay.

A Form W-4 remains in effect until the employee gives you a new one. If an employee submits a replacement form, withholding begins based on the new form no later than the start of the first payroll period ending on or after the 30th day from the date you received the replacement Form W-4. Getting these documents on file immediately ensures your initial wage payments comply with federal regulations.

How does the IRS determine if someone is an employee or a contractor?

Classification turns on control, not on a label or a contract. The Internal Revenue Service weighs three distinct categories when evaluating a working relationship: behavioural control, financial control, and the type of relationship. Behavioral control examines whether the business has a right to direct and control how the worker does the task. Financial control looks at whether the business directs the financial and business aspects of the worker's job.

There is no magic or set number of factors that makes the worker an employee or an independent contractor. No one factor stands alone in making this determination. Instead, the entire relationship is considered to see who genuinely controls the outcome and the process. Employers who classify an employee as an independent contractor without a reasonable basis may be held liable for employment taxes for that worker.

Misclassification has a steep price. If an employer or worker is unsure of the status, they can file Form SS-8 to ask the IRS to determine it. However, the IRS notes it may take at least six months to receive a determination on your filing. It is critical to evaluate the nature of the control you exert over a worker before deciding how they should be paid.

Do S corporation owners need to run payroll for themselves?

Yes, S corporation owners who perform services for their business must run payroll. S corporations must pay reasonable compensation to a shareholder-employee in return for services that the employee provides to the corporation before non-wage distributions may be made. This is a strict federal requirement meant to ensure proper employment taxes are paid on earned income.

Attempting to avoid payroll taxes by taking only distributions is a compliance risk. The IRS has the authority to reclassify payments made to shareholders from non-wage distributions to wages. If an audit reveals that reasonable compensation was not paid, the business can face significant penalties and back taxes. Establishing a standard payroll process for the owner is the safest way to maintain the S corporation's tax advantages while staying compliant.

How long do I need to keep payroll records?

Federal law imposes specific retention periods for employment documents. Under the Fair Labor Standards Act, payroll records must be kept for three years. This ensures that the government can verify minimum wage and overtime compliance if an investigation occurs.

The records that wage computations are based on have a slightly shorter retention requirement. Items including time cards and wage rate tables must be kept for two years. Maintaining a reliable filing system, whether digital or physical, is essential to meet these Department of Labor obligations. Workers' compensation requirements vary sharply by state law and you will need to check your specific state's guidelines for records related to those policies.

I am just starting out. What is the right sequence for setting this up?

Running payroll is not an isolated task. Many owners comparing payroll tools have not formed the business yet, have formed it without an Employer Identification Number, or are running personal and business money through a single account. The IRS itself points out that opening a separate business bank account is one of the first things a new business should do. You cannot run payroll without an EIN, as the IRS treats the employer as the distinct entity responsible for withholding taxes.

Someone forming a business now needs the legal entity, the EIN, a separate business account, and then bookkeeping software, in that precise order. Finding a service that houses the formation, the registered agent, the EIN, and bookkeeping support in one place is a massive advantage. Start here, then pick a payroll tool. Connecting all these structural elements first ensures your payroll software has the proper foundation to work from.

This is why many new owners choose a platform like ZenBusiness to establish the business correctly. Once the foundation is laid, you can connect to a dedicated payroll service. For instance, you can request a connection to ZenBusiness's ADP payroll partnership directly from your dashboard to handle the actual paychecks. Handling the entity and the EIN first prevents major compliance delays later.

Which payroll services handle single-employee setups?

Choosing a payroll provider comes down to understanding your specific needs and what each platform costs. The options below are listed alphabetically rather than as a ranking.

ADP provides comprehensive payroll solutions through its RUN Powered by ADP platform, which is built for businesses with 1 to 49 employees. ADP is a separate service with its own platform, its own billing, and its own support. ADP does not publish payroll pricing and quotes per business. A business owner will need to speak with an ADP representative to discuss their employee count and pay schedule to receive a precise quote.

Gusto offers three distinct tiers for payroll and benefits administration. As of October 6, 2026, the Simple plan costs $49 per month plus $6 per person. The Plus plan is $80 per month plus $12 per person. For businesses needing advanced HR tools, the Premium plan is $180 per month plus $22 per person.

OnPay provides a single, straightforward tier for its payroll and HR software. As of October 6, 2026, the service costs $49 per month plus $6 per worker. The public pricing page quotes a start price of $55 per month, which accounts for the base fee and one employee.

Patriot Software is notably cheaper at the very bottom end for employers who just need the basics. As of October 6, 2026, Basic Payroll costs $17 per month plus $4 per employee. The Full Service tier, where Patriot handles the tax filings, costs $37 per month plus $5 per employee.

QuickBooks Payroll integrates directly with QuickBooks accounting software. As of October 6, 2026, Workforce Payroll plus Simple Start costs $88 per month plus $6.50 per employee. The Essentials bundle is $125 per month plus $6.50 per employee. Workforce Premium plus Plus is $203 per month plus $10 per employee. Intuit currently offers a promotional rate of 50% off the base price for three months, but that is a temporary discount and not the ongoing standard price.

Square Payroll is hard to beat for a contractor-only setup. As of October 6, 2026, paying both employees and contractors costs $35 per month plus $6 per person. If a business operates exclusively with contractors, Square offers a contractor-only plan for just $6 per contractor per month with no base fee.

SurePayroll handles small business and household employment. As of October 6, 2026, standard payroll starts from $29 per month plus $7 per worker. A multi-state add-on is available for $9.99 per month, and specialized household payroll starts at $39 per month.

ZenBusiness is a comprehensive platform for setting up and running your business operations. As of October 6, 2026, the Starter plan is $0 plus state fees. The Pro plan is $199 and the Premium plan is $299. Pro and Premium renew at their annual prices. The EIN and operating agreement are included from Pro up, and cost $99 each on the Starter plan. Registered agent services are $199 per year, Money Pro bookkeeping is $30 per month, and a business website is $129 per year. Payroll itself is handled by ADP, is quoted by ADP per business, and is not included in any ZenBusiness plan price. ZenBusiness customers may be eligible for promotional payroll pricing during their ADP consultation.

Sources

This article provides general information and should not be construed as legal, tax, or accounting advice; requirements vary by jurisdiction and are subject to change.