Hiring Your First Employee in Texas: The Payroll Checklist

Before the first day

• Get a federal Employer Identification Number (EIN) from the IRS, free online
• Enroll in EFTPS so you can make federal payroll tax deposits electronically
• Decide how often you'll pay. Under the Texas Payday Law, most non-exempt employees must be paid at least twice a month
• Decide on workers' compensation. Texas lets most private employers opt out, but employers without coverage must notify the state and their employees

When the employee starts

• Form I-9: verify identity and work eligibility within three business days of the start date
• Form W-4: the employee's federal withholding choices
• Report the new hire to the Texas Attorney General's Employer New Hire Reporting program within 20 days
• Keep a personnel file with pay rate, job title and signed forms

Register with the Texas Workforce Commission

Texas has no state income tax, so there's no state withholding, but employers pay state unemployment tax. You generally must register with the TWC once you've paid $1,500 or more in wages in a calendar quarter or had at least one employee during 20 different weeks in a year. New employers get a starting tax rate, and wage reports are filed every quarter.

Every payday and every quarter

• Withhold federal income tax and the employee's share of Social Security and Medicare
• Pay the employer's matching share of Social Security and Medicare
• Deposit federal payroll taxes on your monthly or semiweekly schedule
• File Form 941 each quarter and the TWC quarterly wage report
• File Form 940 for federal unemployment tax and give W-2s to employees by January 31

Pay at least minimum wage

Texas follows the federal minimum wage of $7.25 an hour, and non-exempt employees must be paid overtime at one and a half times their regular rate for hours over 40 in a workweek. Track hours for every non-exempt employee.