What payroll tax accounts should new businesses register for?

Payroll Tax Accounts for New Businesses in Tennessee

When starting a business in Tennessee, registering for the correct payroll tax accounts is essential to ensure compliance and smooth operations. Here are the key payroll tax accounts new businesses should register for:

• Federal Employer Identification Number (EIN): Obtain this from the IRS to report federal payroll taxes, including Social Security, Medicare, and federal income tax withholding.
• Tennessee State Withholding Account: Register with the Tennessee Department of Revenue if you have employees subject to state income tax withholding. Note that Tennessee does not have a broad state income tax but does tax interest and dividends under the Hall Income Tax, which is being phased out.
• Unemployment Insurance (UI) Account: Register with the Tennessee Department of Labor and Workforce Development to pay state unemployment insurance taxes. This account is necessary for reporting and paying UI taxes on employee wages.
• Local Tax Accounts: While Tennessee does not have local income taxes, verify any city or county-specific payroll tax requirements or business licenses that may impact payroll operations.

Additional Operational Considerations

As of 2026, ensure your business maintains accurate payroll recordkeeping to comply with federal and state reporting requirements. Automating payroll processes can help manage tax withholdings, filings, and payments efficiently.

Also, review employee classification carefully to distinguish between employees and independent contractors, as this affects payroll tax obligations.