Quick answer: To set up payroll for your first employee in New York, get a federal EIN, register with New York for withholding and unemployment insurance, carry workers' compensation and disability and paid family leave coverage, collect Forms W-4, IT-2104, and I-9, report the new hire to the state, and give the required wage notice. Then withhold and deposit taxes each payday and file federal and New York payroll returns on schedule.
Hiring your first employee is a milestone, and it is also the moment your business takes on a new set of government obligations. Payroll mistakes come with penalties that add up quickly, and New York has more employer requirements than many states. Here is the order we walk new employers through, from registrations to the first quarterly filing.
Step 1: Get your federal and state registrations in place
Before the first paycheck, you need:
- A federal Employer Identification Number (EIN). If you are a sole proprietor using your Social Security number, you need an EIN now. Apply free at irs.gov.
- New York employer registration. New York employers register for unemployment insurance and state withholding through the Department of Labor. This gives you the account numbers you will use on your quarterly filings.
- Federal tax deposit setup. Enroll in the IRS Electronic Federal Tax Payment System (EFTPS) or confirm your payroll provider will make deposits for you.
If you are in New York City or the downstate counties, you may also owe the Metropolitan Commuter Transportation Mobility Tax (MCTMT). It does not apply to employers in Central New York.
Step 2: Put the required insurance in place
New York requires most employers to carry three types of coverage once they have employees:
- Workers' compensation insurance, which covers work-related injuries and illness.
- Disability benefits insurance (DBL), which pays partial wages for off-the-job injury or illness.
- Paid Family Leave (PFL), usually added to the disability policy, which provides paid time off to bond with a new child, care for a family member, or deal with certain military situations.
You can buy these through an insurance agent, a private carrier, or the State Insurance Fund. Employers may withhold a limited employee contribution for DBL and PFL; the state sets the PFL contribution rate each year, so check the current figure. Going without coverage brings serious penalties.
Step 3: Collect the hiring paperwork and report the hire
On or before the first day of work, have your new employee complete:
- Form W-4 for federal withholding.
- Form IT-2104 for New York State withholding (and New York City or Yonkers, if applicable).
- Form I-9 to verify identity and work eligibility. You must review the documents within three business days of the start date and keep the form on file.
You must also give a written pay notice at hire under New York's Wage Theft Prevention Act. It states the rate of pay, overtime rate, regular payday, and other details, in English and the employee's primary language when a state template is available. Get a signed acknowledgment and keep it. The Department of Labor publishes the forms.
Finally, New York requires employers to report each new or rehired employee to the state within 20 calendar days of hire. The information goes to the New York State New Hire Reporting program and is used for child support enforcement. Many payroll services file this automatically, but confirm that yours does.
Step 4: Set up how and when you pay
Decide on a pay schedule and stick to it. New York has rules on pay frequency: manual workers generally must be paid weekly unless the employer has state authorization to pay less often, while most other employees must be paid at least semi-monthly.
Know the minimum wage that applies to your location. New York's rate for upstate counties, including Central New York, is different from the rate in New York City, Long Island, and Westchester, and it is scheduled to be adjusted over time. Check the current rate on the Department of Labor's website before you set wages. Each paycheck must come with a wage statement showing hours, rates, gross pay, deductions, and net pay.
Step 5: Withhold, deposit, and file
Every payday, you withhold federal income tax, Social Security and Medicare, New York income tax, and any allowed DBL and PFL contributions. You also owe the employer share of Social Security and Medicare, plus federal and state unemployment taxes.
The main ongoing filings are:
- Federal Form 941, quarterly, reporting wages and federal withholding. Very small employers may be told to file Form 944 annually instead.
- Federal Form 940, annually, for federal unemployment tax.
- New York Form NYS-45, quarterly, combining withholding reconciliation and unemployment insurance wage reporting.
- New York withholding deposits on the schedule the state assigns, based on how much you withhold.
- Forms W-2 and W-3, due to employees and the Social Security Administration by January 31.
Deposit schedules depend on the size of your payroll, and late deposits draw penalties even when the return is filed on time. Put the due dates on a calendar, or confirm in writing that your payroll provider owns them.
Should you run payroll yourself?
You can, with good software and discipline. Most small employers are better served by a payroll service that calculates withholding, makes deposits, and files the returns. The cost is modest compared with a single penalty notice. Whatever you choose, someone still needs to record payroll in your books and reconcile the liabilities each month.
We help businesses in Syracuse and across Central New York get payroll set up correctly from the first check, and our bookkeeping and payroll services can handle it on an ongoing basis.
Frequently asked questions
Do I need workers' compensation for just one employee in New York?
Generally yes. New York requires most employers to carry workers' compensation as well as disability and paid family leave coverage, even with a single employee. There are limited exceptions, so confirm your situation with the Workers' Compensation Board or your insurance agent.
How soon do I have to report a new hire in New York?
Within 20 calendar days of the employee's first day of work. Many payroll services report new hires automatically, but it is the employer's responsibility to make sure it gets done.
What is the NYS-45?
It is New York's quarterly combined return for withholding, wage reporting, and unemployment insurance. Employers file it each quarter, typically electronically, and it reports wages paid and state income tax withheld for each employee.
Can I pay my first employee as a contractor instead?
Only if the worker truly meets the tests for independent contractor status. Calling someone a contractor to avoid payroll is a common and costly mistake. Our article on employee or independent contractor explains how to tell the difference.
This article is general information for 2026, not tax or legal advice for your situation. Tax rules and figures change; confirm current amounts with the IRS, New York State, or your accountant before acting.
Related service: Bookkeeping & Payroll