California New Employer Information
Federal and State Tax Accounts
Federal Tax Accounts:
- Your business will need to have an Employer Identification Number (also known as an EIN or FEIN), if you do not already have one.
- The simplest way is to apply for an EIN with the IRS online. There is no cost to apply for an EIN.
- To read more about applying for EINs, read our help article, “Your Step-by-step Guide on How to Apply for EIN”.
- Although it is not required, we recommend using the Electronic Federal Tax Payment System (EFTPS). You can easily register online. You will need to have this account to make tax payments online or to view tax payments made on your behalf if you are a Patriot Full Service Payroll customer.
- To find out more about EFTPS, please read our article, “What Is EFTPS?”
State of California Tax Accounts:
- New employers in California can register online for e-Services with the California Employment Development Department (EDD).
- You must register within 15 days of the date you paid excess of $100 in wages.
- You will be assigned an eight-digit employer account number. The EDD administers California’s payroll taxes, including:
- Unemployment Insurance (SUI)
- Employment Training Tax
- State Disability Insurance (including Paid Family Leave or PML)
- Personal Income Tax withholding (PIT) aka state income tax (SIT)
- The California new employer SUTA rate is 3.4% for new employers and will remain that rate for a period of 2-3 years. Note: DO NOT include the Employer Training Tax (ETT) when entering your SUTA rate in Patriot Software. This is automatically calculated.
- After liability is established, you will be assigned a new state unemployment tax assessment (SUTA) rate every year. To learn more, please visit the CA EDD.
- For more information, please read our help article, “What Is SUTA Tax?”
Setting Up Your New Employee:
- Fill out the required Form I-9 for employee work verification in the USA. This is a two part form. The first half is filled out by the employee. The second half is filled out by you, the employer.
- To learn more about Form I-9, please read our help article, “Form I-9 In a Nutshell”.
- You must retain each employee’s completed Form I-9 as long as the individual works for you. For more information, please read “What Should Be in an Employee File?”
- Have your new employee fill out Form W-4, Employee’s Withholding Certificate, for federal income taxes.
- For more information, read our help article, “Updates to the Income Tax Withholding Tables and What You Need to Know”
- Have your new employee fill out the State Form DE 4, Employee Withholding Allowance Certificate for California for state income taxes (SIT).
- You are required to follow the most stringent minimum wage laws for the federal government, the state of California, as well as any local minimum wage laws.
- California’s minimum wage in 2022 is $15.00 for employers with 26 or more employees and $14.00 for employers with 25 or fewer employees.
- You need to display the minimum wage poster for your employees where they can read it.
- You can access all of the required posters on the Department of Industrial Relations website.
Once you have all the necessary information, you will be able to set up your payroll for your business.
You will be required to keep employee payroll records for at least three years. For more information, please read our help article, “What Employers Should Know About Employee Payroll Records”
Let us know if you have any questions. We are here to help!