What payroll tax accounts should new businesses register for?

Payroll Tax Accounts for New Businesses in Virginia

When starting a business in Virginia, registering for the correct payroll tax accounts is essential to ensure compliance with state and federal requirements. Proper registration supports accurate tax withholding, reporting, and payment processes.

Key Payroll Tax Accounts to Register

• Virginia Department of Taxation Withholding Account: This account is required for withholding Virginia state income tax from employee wages. Register through the Virginia Department of Taxation to obtain your withholding account number.
• Virginia Unemployment Insurance (UI) Account: Businesses with employees must register with the Virginia Employment Commission (VEC) to pay state unemployment insurance taxes. This account funds unemployment benefits for eligible workers.
• Federal Employer Identification Number (EIN): Obtain an EIN from the IRS to report federal payroll taxes, including Social Security, Medicare, and federal income tax withholding.
• IRS Electronic Federal Tax Payment System (EFTPS): While not an account registration per se, enrolling in EFTPS allows businesses to electronically deposit federal payroll taxes on time.

Additional Operational Considerations

• Employee Classification: Correctly classify workers as employees or independent contractors to determine payroll tax obligations accurately.
• Payroll Tax Reporting and Filing: Stay current with quarterly and annual payroll tax filings to avoid penalties.
• Recordkeeping: Maintain detailed payroll records for all employees, including wages, tax withholdings, and tax payments.
• Automation: Consider payroll software that integrates tax account management and filing to streamline compliance.

As of 2026, always verify registration requirements directly with the Virginia Department of Taxation, Virginia Employment Commission, and the IRS to ensure up-to-date compliance.