You just hired your first employee. Congrats! Now comes the part no one warned you about: registering for state payroll taxes.
Every state where you have employees requires you to set up tax accounts before you can legally run payroll. Miss this step, and you're looking at penalties, back taxes, and a lot of awkward calls to government agencies.
The good news? The registration process itself isn't complicated. It's just tedious, repetitive, and varies by state. This guide breaks down exactly what you need to register for, how to do it, and what documents you'll need on hand.
If you're setting up payroll for the first time, this is one piece of a larger puzzle. Check out our complete guide on how to set up payroll for your startup for the full picture.
What State Payroll Taxes Do You Need to Register For?
When you hire employees, you're responsible for two main types of state payroll taxes:
State Income Tax Withholding (SIT): You withhold a portion of each employee's paycheck and send it to the state. This is required in 41 states. The nine states with no personal income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming) don't require withholding registration.
State Unemployment Insurance (SUI): This is an employer-paid tax that funds unemployment benefits. Unlike income tax withholding, SUI is required in all 50 states, including the no-income-tax states. New employers typically pay rates between 2.7% and 4.1% on each employee's first $7,000 to $17,600 in wages, depending on the state. For a deeper dive on how SUI works and what rates to expect, see our founder's guide to state unemployment insurance taxes.
Some states pile on additional payroll taxes beyond the basics. California requires registration for State Disability Insurance (SDI) and an Employment Training Tax (ETT). New York has disability benefits, paid family leave, and a Metropolitan Commuter Transportation Mobility Tax for NYC-area employers. Washington, Massachusetts, Colorado, Oregon, and Connecticut all have paid family and medical leave programs with their own registration and withholding requirements.
The number of tax accounts you need to manage adds up fast. A startup with employees in California, New York, and Texas might need six or seven different state tax account numbers just to run payroll legally.
Step-by-Step: How to Register for State Payroll Taxes
The general process is the same across states, even though the specific portals and forms vary.
Step 1: Get Your Federal EIN First
Before any state will let you register, you need an Employer Identification Number (EIN) from the IRS. This is your business's federal tax ID. You can apply for an EIN online and get it immediately. If you're not sure whether you need an EIN or how it differs from other tax IDs, our guide to SSN, ITIN, and EIN breaks it all down.
Step 2: Foreign Qualify If You're Registering Outside Your Home State
If you incorporated in Delaware but have an employee in California, you need to "foreign qualify" with California's Secretary of State before you can register for payroll taxes there. This is essentially registering your out-of-state business to operate in a new state. It typically costs $100 to $800 depending on the state and requires designating a registered agent.
Step 3: Register for State Income Tax Withholding
This happens through your state's Department of Revenue, Department of Taxation, or Franchise Tax Board. Most states offer online registration that takes 15 to 30 minutes. You'll receive a state withholding account number, which you'll need to connect to your payroll system.
Step 4: Register for State Unemployment Insurance
This is handled by your state's Department of Labor, Employment Security Commission, or Workforce Commission (the name varies). Again, most states have online portals where you can complete registration in one sitting. You'll receive an SUI account number and your assigned tax rate.
Step 5: Check for Additional State Taxes
Some states require separate registrations for disability insurance, paid family leave, or local taxes. California handles SDI and PFL through the same EDD registration as SUI. New York requires additional filings for disability and PFL. If you have employees in states with these programs, confirm you've registered for everything.
State-Specific Registration Details
California: Register through the Employment Development Department (EDD) within 15 days of paying $100 or more in wages. One registration (Form DE-1) covers UI, ETT, SDI, and state income tax withholding. California's SDI rate is 1.2% in 2025, increasing to 1.3% in 2026, with no wage cap.
New York: File Form NYS-100 through NY Business Express to register for both UI and withholding in one step. Liability begins once you pay $300 or more in a calendar quarter. New employer SUI rate is 4.1% on the first $17,600 in wages.
Texas: No state income tax means you only need SUI registration. Register through the Texas Workforce Commission within 10 days of becoming liable. Online registration takes about 20 minutes and you get your account number immediately. New employer rate is 2.7% on the first $9,000.
Florida: Also no state income tax. Register for "reemployment tax" (Florida's name for SUI) through the Florida Department of Revenue. Initial rate is 2.7% on the first $7,000 in wages.
Illinois: Register through the MyTax Illinois portal within 30 days of starting business. This single registration covers both IDOR (withholding) and IDES (unemployment). Processing typically takes one to two business days.
Information and Documents You'll Need
Gather these before you start any state registration:
- Federal EIN from the IRS
- Business legal name and DBA (if applicable)
- Entity type and formation date (LLC, C-corp, S-corp, etc.)
- State of incorporation and date
- Physical business address (PO boxes usually aren't accepted)
- NAICS code describing your business activity
- Owner/officer information including names, titles, SSNs, and addresses
- Bank account and routing numbers for tax payments
- Estimated first payroll date and number of employees
- Expected quarterly wages (a rough estimate is fine)
If you acquired a business with existing employees, you may also need information about the prior employer's tax accounts.
Multi-State Registration for Remote Teams
Here's where things get complicated for startups.
Every state where an employee physically works creates a payroll tax obligation. It doesn't matter where your company is headquartered. If you're a Delaware C-corp based in San Francisco with a single engineer working from her apartment in Austin, you need to register for Texas unemployment insurance.
Startups with distributed teams often find themselves registering in five, ten, or even twenty states within their first few years. Each state means another registration process, another set of deadlines, another quarterly filing schedule, and another opportunity to miss something and get hit with penalties.
A few things to keep in mind:
Withholding follows the employee's work location. If someone lives in New Jersey but works in New York, you generally withhold for both states (with credits). New York's "convenience of employer" rule is particularly aggressive and can tax remote workers as if they were in-state.
One employee is enough to create nexus. There's no minimum headcount threshold. A single part-time remote worker in a new state triggers registration requirements.
Foreign qualification adds cost and complexity. Before you can register for payroll taxes in most states, you need to register your business with that state's Secretary of State. Fees range from $100 to $800 per state, and you'll need a registered agent in each state.
Local taxes exist too. Some cities and counties have their own income taxes or payroll taxes separate from the state. New York City, Philadelphia, San Francisco, and dozens of smaller municipalities add another layer of compliance.
For guidance on whether to hire employees or contractors in new states, see our guide on 1099 vs W-2 workers.
How Warp Handles State Tax Registration
Warp is the only AI-native HR and payroll platform built for ambitious companies. Instead of clicking through clunky dashboards or .gov websites for taxes, Warp's AI agents open every state tax account, file every payroll form, and resolve every tax notice automatically.
When you add a new employee in Warp and enter their work location, we handle the state tax registration for you. No government portals. No paper forms. No waiting on hold with state agencies.
Here's what that looks like in practice:
Automatic state tax account setup. Add an employee's work state, and Warp registers your business with that state's tax agencies. You get your account numbers without ever visiting a .gov website.
10,000+ tax jurisdictions monitored. Warp tracks rate changes, filing deadlines, and new tax programs across every state, county, and city so you don't have to.
Tax notice resolution. When states send notices (and they will), Warp's AI resolves 80% of them instantly. For the rest, your dedicated Account Manager handles it.
Quarterly and annual filings on autopilot. Every state has different filing frequencies and deadlines. Warp files everything automatically and on time.
Same-day setup with no sales calls. You can be running payroll in all 50 states by the end of the day, without sitting through a demo or negotiating pricing.
Every Warp customer gets a dedicated Account Manager and Benefits Advisor included to guide them through payroll setup, multi-state expansion, and benefits selection. You don't have to spend hours on hold with tax agencies or worry about compliance mistakes.
With Warp, you'll never visit a government website, negotiate with tax agencies, or pay accountants $150 per filing. Just focus on building your business while Warp handles payroll, compliance, and benefits for your team across any state or country.
Thousands of fast-growing startups trust Warp to stay compliant while they scale. See how Bland AI uses Warp to manage payroll across multiple states, or check out Warp's pricing to see how it compares to doing everything yourself.
Frequently Asked Questions
How long does state payroll tax registration take?
It depends on the state and registration method. Online registration is fastest, often providing account numbers immediately or within one to two business days. Texas issues account numbers on the spot. California and New York typically process online registrations within a few days. Paper applications sent by mail can take two to four weeks. If you need to foreign qualify with the Secretary of State first, add another one to two weeks to the timeline.
Is there a fee to register for state payroll taxes?
Registering for state income tax withholding and unemployment insurance is free in most states. However, you may need to pay fees for foreign qualification with the Secretary of State ($100 to $800 depending on the state) and registered agent services ($50 to $300 per year per state). Some states also require a minimum deposit or bond for new employers, though this is rare.
Do I need to register in every state where I have employees?
Yes. If an employee physically works in a state, you need to register for that state's unemployment insurance. If the state also has income tax, you need to register for withholding. There's no exemption for having only one employee or for part-time workers. Remote work creates the same obligations as having a physical office in that state.
What happens if I don't register for state payroll taxes?
Penalties vary by state but can add up quickly. You may face late registration penalties, interest on unpaid taxes, and fines for each missed filing. In extreme cases, states can hold company officers personally liable for unpaid payroll taxes. Beyond penalties, running payroll without proper registration puts your employees at risk of not having valid unemployment insurance coverage.
What's the difference between a state tax ID and a federal EIN?
Your federal EIN (Employer Identification Number) is issued by the IRS and identifies your business for federal tax purposes. State tax IDs are separate numbers issued by each state's tax agencies. You'll have a different state tax ID for each state where you register. Most states require your federal EIN as part of the state registration process, but the state account numbers you receive are distinct from your EIN.
Start Running Payroll the Right Way
State payroll tax registration isn't glamorous, but it's non-negotiable. Every employee you hire in a new state triggers new registration requirements, new filing deadlines, and new opportunities for compliance mistakes.
You can handle it yourself by navigating each state's portals and keeping track of every deadline. Or you can let Warp automate your state tax compliance so you can focus on building your company.
Ready to stop thinking about payroll taxes? Get started with Warp today.
