Quick note: This is general guidance. Rules and deposit schedules depend on your facts. Confirm deadlines in your IRS and EDD notices or ask a professional.
Contents
Before you run payroll: setup checklist
Accounts and registrations
- Get FEIN and state employer account numbers.
- Register with California EDD e Services for Business.
- Set up EFTPS for federal deposits.
- Choose a pay schedule and document policies.
Employee onboarding
- Collect W 4 and California DE 4 forms.
- Complete I 9 within required timelines.
- Report new hires to California within the required window.
- Provide required notices and posters.
Every pay period tasks
- Calculate gross pay, overtime, and required California premiums when applicable.
- Withhold federal and state income tax, Social Security, Medicare, and state disability or unemployment amounts as required.
- Fund retirement and benefit deductions per plan rules.
- Deliver pay stubs with all California required information.
- Back up payroll journals and update the general ledger.
Deposits
Your IRS deposit frequency (monthly or semiweekly) is assigned by the IRS. California deposit timing depends on your lookback amounts. Use EFTPS for federal and e Services for California to avoid mail delays.
Monthly reminders
- Reconcile payroll liability accounts to deposits and reports.
- Verify benefit invoices match payroll deductions.
- Confirm state and local rate changes in your system.
- Archive payroll registers and approvals.
Quarterly filings
Federal
- Form 941 for federal payroll taxes by the last day of the month after quarter end.
- FUTA deposits when threshold is met. Annual Form 940 due in January.
California
- EDD DE 9 (quarterly return) and DE 9C (wage report) generally by the last day of the month after quarter end.
- State deposits per your assigned schedule through e Services.
Year end checklist
- Verify employee names, addresses, SSNs, and totals before processing W 2 forms.
- Issue W 2 to employees and file with SSA by the federal deadline.
- Issue 1099 forms for qualifying contractors and file with IRS and state as required.
- Reconcile 4 quarters of 941 and state filings to W 3, W 2 totals, and ledger.
- Update rates and unemployment notices for the new year.
Pro tip
Run a mock W 2 report in December. Fixing addresses and fringe benefits before the last payroll prevents corrected forms later.
California call outs
- Use EDD e Services for Business for returns and deposits. It is faster and gives confirmation numbers.
- Keep an eye on changes to minimum wage, overtime rules, and required paid sick leave. These affect payroll calculations and pay stub content.
- Paid Family Leave and State Disability are administered by the state. Confirm employer and employee funding requirements each year.
- City level taxes or mandates may apply where you have employees. Check the city where work is performed.
Common pitfalls
- Wrong deposit schedule. Verify your assigned schedule before the first run.
- Late new hire reporting. Put it in your onboarding checklist.
- Owner pay not processed as W 2 when required. S corp owners who work in the business generally need payroll.
- Misclassifying workers as contractors. Review facts and save agreements and invoices.
- Unreconciled liability accounts. Match every deposit to a report number each month.
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Book a free consultationFrequently asked questions
How do I know my federal deposit schedule?
The IRS assigns it based on your lookback period. Check your most recent IRS notice or your EFTPS account. Monthly depositors usually deposit by the 15th of the following month. Semiweekly depositors follow the IRS weekday rules.
What forms do I file each quarter in California?
EDD DE 9 and DE 9C. File and pay through e Services by the last day of the month after the quarter ends, unless EDD has assigned you a different schedule.
Do I need workers' compensation before the first payroll?
Yes, California employers generally must carry workers' compensation insurance once you have employees. Coordinate with your broker before you pay wages.
We pay contractors too. Are 1099s part of payroll?
They are not payroll, but they are part of year end reporting. Collect W 9 forms and issue 1099 forms when required. Review worker classification first.