New hire payroll setup: the forms and steps before the first paycheck

Getting a new hire’s first paycheck right depends almost entirely on work done before that paycheck runs. Miss a form and you either can’t pay them correctly or you’re out of compliance. Here’s the checklist of what has to be in place before payroll can run for someone new. (Requirements vary by state and some are legal, not tax, obligations — general guidance, not legal advice.)

Federal W-4

The Federal W-4 tells you how much federal income tax to withhold. Without it, you’re guessing — and the modern form’s inputs (filing status, dependents, extra withholding) drive the very first paycheck’s tax.

State withholding form

Many states have their own withholding certificate, separate from the federal W-4, for state income tax. States without an income tax don’t need one; most others do. For a remote or multi-state hire, it’s the employee’s work state that governs.

Form I-9

The I-9 verifies the employee’s eligibility to work in the US. It’s not a tax form — it’s a legal requirement with its own timing rules and document checks — but it’s part of every legitimate onboarding and carries real penalties if skipped or done late.

Direct deposit authorization

To pay electronically you need the employee’s bank details and written authorization. Collect and verify these before the first run so the payment doesn’t bounce or delay.

State new-hire reporting

Employers are required to report new hires to the state within a set window — a step many small employers don’t know exists. It feeds child-support enforcement and is mandatory.

Set up the master record

Finally, all of this lands in the employee master record in your payroll system: identity, work location (which drives state tax), pay rate and frequency, the W-4 and state elections, and any deductions. Get this record right and every future run inherits correct settings; get it wrong and every paycheck inherits the error.