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 for compliance and smooth payroll operations. Below are the primary payroll tax accounts new businesses should register for:

• Virginia State Employer Withholding Tax Account: This account is required to withhold Virginia state income tax from employees' wages. Register through the Virginia Department of Taxation to remit withheld taxes regularly.
• Virginia Unemployment Insurance (UI) Account: Businesses must register with the Virginia Employment Commission (VEC) to pay unemployment insurance taxes. This account funds unemployment benefits for eligible former employees.
• Federal Employer Identification Number (EIN): Obtain an EIN from the IRS. This number is necessary for reporting federal payroll taxes, including Social Security, Medicare, and federal income tax withholding.

Additional Operational Considerations

• Payroll Tax Reporting and Filing: Establish a schedule for submitting payroll tax returns and payments to both federal and state agencies to avoid penalties.
• Employee Classification: Properly classify workers as employees or independent contractors to determine payroll tax obligations accurately.
• Recordkeeping: Maintain detailed payroll records, including tax filings and payments, for at least four years as recommended by Virginia state guidelines.
• Automation Tools: Consider using payroll software or services that integrate tax account registrations, withholding calculations, and filing reminders to streamline compliance.

As of 2026, always verify registration requirements and procedures on official Virginia Department of Taxation and Virginia Employment Commission websites, as payroll tax regulations may update periodically.