What payroll tax accounts should new businesses register for?

Payroll Tax Accounts for New Businesses in Minnesota

When starting a business in Minnesota, registering for the correct payroll tax accounts is essential for compliance and smooth operations. Below are the key payroll tax accounts new businesses should set up:

• Federal Employer Identification Number (EIN): Obtain an EIN from the IRS. This is required for reporting federal payroll taxes such as Social Security, Medicare, and federal income tax withholding.
• Minnesota Withholding Tax Account: Register with the Minnesota Department of Revenue to withhold state income taxes from employee wages. This account enables proper state tax withholding and reporting.
• Minnesota Unemployment Insurance (UI) Account: Register with the Minnesota Unemployment Insurance Program to pay state unemployment taxes. This supports unemployment benefits for eligible former employees.

Additional Considerations

• Workers’ Compensation Insurance: While not a tax account, securing workers’ compensation coverage is mandatory for payroll compliance and employee protection.
• Recordkeeping and Reporting: Maintain accurate payroll records and submit timely tax filings to both federal and state agencies. Automation tools can streamline these tasks.
• Employee Classification: Ensure correct classification of workers as employees or independent contractors to avoid payroll tax issues.

As of 2026, always verify registration requirements and processes on official Minnesota state websites or through authorized resources to stay current with any updates.