Companies can complete payroll for one employee by receiving an employee identification number (EIN) and local ID numbers, studying withholding requirements, completing employee forms, creating a payroll system and processing payroll on a regular basis, as noted by QuickBooks and SBA.gov. Processing payroll for one employee is the same as processing payroll for several employees after the payroll system is in place.
To set up a payroll processing system for one employee:
- Receive an EIN
- Learn withholding requirements
- Complete employee forms
- Set up payroll
- Process payroll
Organizations must apply for and receive an EIN from the IRS before they can hire any employees, even just one, notes SBA.gov. Organizations may also need to obtain state or local ID numbers on top of the EIN.
Identify whether the employee is defined as an employee or independent contractor and identify the applicable withholding requirements.
Have employees complete Federal Income Tax Withholding Form W-4.
There are several accounting and payroll software services available, such as QuickBooks, so organizations should research and choose a software, create an internal method or hire an external organization to perform these services. Choose and define payroll periods and input all employee information in the accounting system.
Process payroll on the defined payroll periods for all employees, even if it is just one employee, and pay all applicable payroll taxes on a quarterly or annual basis.