Blue Star Bookkeeping · Austin, TX · Updated May 7, 2026
Payroll Basics for Your First Employee in Texas
Hiring your first employee in Texas changes your tax and reporting obligations immediately — you will need an employer identification number, payroll tax withholding and deposits, and ongoing state and federal filings, even if it is just one part-time employee.
Before the first paycheck
You will need a federal Employer Identification Number (EIN) if you do not already have one, a completed Form W-4 from the employee, and a plan for how you will calculate and withhold federal payroll taxes.
Texas-specific obligations
Texas has no state income tax, but employers are generally required to register with the Texas Workforce Commission and pay state unemployment tax, along with carrying workers' compensation coverage if applicable to your business.
Ongoing filings
Payroll is not a one-time setup — it comes with recurring federal deposits, quarterly filings, and year-end forms like the W-2 for your employee and any required federal reconciliations.
Employee vs. independent contractor
Misclassifying a worker as a contractor when they should be an employee is one of the more common and costly payroll mistakes. If you are not sure which applies, that is worth confirming before the first payment goes out, not after.
Common questions
Can you set up payroll for me from scratch?
Yes — our Payroll service covers setup and ongoing processing, tax deposits, and quarterly filings.
What if I already have employees and payroll feels disorganized?
We can review your current setup and clean up what needs it — this comes up often and is very fixable.
Related service
Payroll →General information for Austin, TX taxpayers — not personalized tax or legal advice. Rules, thresholds, and deadlines change; confirm specifics for your situation with our office or the relevant government agency.
Ready to get started?
Schedule a free 15-minute consultation. We will answer your questions and walk you through the process.