How to do payroll for a small business
To run payroll yourself: get an EIN, collect each employee's Form W-4 and Form I-9, choose a pay schedule, calculate withholding and FICA for every paycheck, pay employees with a pay stub, deposit the withheld and employer taxes on your monthly or semiweekly schedule, and file Form 941 each quarter and Form 940 each year. States add their own registrations and returns.
Enter each employee's figures and get a clear pay stub, with federal taxes calculated.
Make this pay period's pay stubsBefore the first payroll
- Get an employer identification number (EIN); federal payroll returns and deposits need one.
- Have each new employee complete Form W-4 (for withholding) and Form I-9 (to verify they can work in the US).
- Register with your state for income tax withholding and unemployment insurance, if your state requires it.
- Choose a pay schedule: weekly, every two weeks, twice a month or monthly.
Every payday
- Work out gross pay from salary or hours.
- Withhold federal income tax (Publication 15-T), social security (6.2%) and Medicare (1.45%), plus any state tax and other deductions.
- Pay the employee the net amount.
- Give them a pay stub showing gross pay, each deduction, net pay and year-to-date totals. Many states require one.
- Keep records of hours, pay and tax withheld.
Deposits and returns
| What | When |
|---|---|
| Deposit withheld income tax, social security and Medicare | Monthly or semiweekly, depending on your deposit schedule |
| Form 941 (quarterly federal tax return) | By April 30, July 31, October 31 and January 31 |
| Form 940 (annual FUTA return) | Once a year |
| Form W-2 to each employee | After the end of the year |
PayDocs makes the pay stub and can calculate federal taxes on it. It doesn't deposit taxes, file returns or pay employees.
Questions
Can I do payroll myself without software?
Yes. Many small employers calculate pay themselves, pay by bank transfer, give a pay stub and make deposits and filings through the IRS's systems. Payroll software automates the filing part.
Do I have to give employees pay stubs?
There's no federal requirement, but many states require a wage statement each payday. Check the rules where your employees work.
Sources
- IRS Publication 15 (2026), (Circular E) Employer's Tax Guide
- IRS Publication 15-T (2026), Federal Income Tax Withholding Methods
Official sources checked September 24, 2026. This guide explains how pay documents work; it is not tax or legal advice.