How do I run payroll for one employee?

Answer first: the practical way to run payroll for one employee

Most small businesses don’t manually calculate payroll each pay period. Instead, they use a payroll service to:

1. Calculate gross-to-net pay (after deductions).
2. Withhold the right taxes.
3. Run pay runs and send direct deposit (or checks).
4. File required payroll tax forms and support year-end W-2/1099 reporting.

Because payroll rules and deadlines can change—and details depend on your state and how you pay—this is the lowest-stress route for many owners, especially if you’re new to the US system.

RunWise Pay is FREE for the business and matches you with participating payroll service providers. We are not the payroll provider, and we don’t run payroll or file taxes for you.

Step-by-step: how payroll usually works (for one employee)

If you hire your first employee (or you’re switching to payroll), the process usually looks like this:

1. Confirm your employee status and pay type (W-2 employee vs. contractor/1099). Payroll services typically handle W-2 payroll and year-end W-2s.
2. Collect only what your provider requests for setup (not sensitive banking details yourself). You and the provider will confirm required fields and withholding preferences.
3. Set pay frequency (weekly, biweekly, semimonthly, or monthly) and pay method (direct deposit or check).
4. For each pay date, enter or approve hours/deductions if needed.
5. The payroll service calculates taxes and deductions, runs the pay run, and submits payroll tax filings according to the applicable schedule.
6. At year-end, the payroll provider prepares W-2 forms (and 1099 forms if applicable, depending on your situation).

If you ever feel unsure about a step—especially tax withholding or deadlines—ask the payroll provider to explain it in writing. You stay in control: compare what’s included, confirm the workflow, and choose who to hire.

What you should expect to pay (realistic ranges)

Cost depends on your state, pay frequency, whether you need direct deposit, and what’s included (tax filings, year-end forms, support, and any add-ons).

Common patterns for one employee include:
- A monthly base fee (often in the low double digits to a bit higher), plus a per-employee fee (sometimes included in the base).
- If you pay more frequently (for example, weekly vs. biweekly), fees may be higher.
- If you need extra support or special processing, some providers charge additional amounts.

Important: these are general ranges, not quotes. Ask each provider for a written breakdown of recurring monthly/annual costs and any additional fees. RunWise Pay is free for the business, and participating providers pay to be matched—you don’t pay us.

Payroll terms, explained simply (so you can ask better questions)

Here are the most common terms owners hear when setting up payroll:

• Pay run: the process of calculating wages, withholding deductions, and sending payment on a specific pay date.
• Withholding: the portion of wages withheld for taxes (federal, and often state), based on your employee’s situation.
• Direct deposit: electronic payment to the employee’s bank account (the provider typically handles delivery).
• W-2: the year-end form that reports wages and tax withholdings for employees.
• 1099: the year-end form often used for contractors (not typically “regular payroll” for employees).
• Payroll taxes: taxes employers must calculate and file based on wages.

Your payroll provider should be able to explain what they handle versus what you handle, and how they keep you compliant in your state. Confirm the exact deliverables (for example, direct deposit, W-2 processing, tax filings) before you sign anything.

Red flags to avoid when choosing payroll for one employee

If you’re comparing providers, watch for these common problems:

• Vague or unclear pricing (for example, “starting at” numbers with unclear add-ons). Ask for a written list of all fees.
• Hidden charges for essentials like tax filing, year-end forms, direct deposit, or support.
• No clear tax-filing responsibility described. You want to understand who files what, and when.
• Poor communication or hard-to-reach support—payroll issues are time-sensitive.
• Pressure to sign quickly without letting you review the package and workflow.

Before you choose, ask for the scope in writing: what exactly is included each pay period and at year-end. Also confirm what you must provide (hours, pay changes, approvals) and how changes are submitted.

For general guidance and options, you can explore services and get started with a free match at RunWise Pay.

Questions to ask before you start

To feel confident setting up payroll for one employee, consider asking:

• Will you handle tax calculations and tax filings for my state and pay frequency?
• Do you include direct deposit, and what information do you need for setup?
• What year-end forms are included (W-2, and do you also support 1099 if I have contractors later)?
• What support do you provide if there’s a payroll mistake or a deadline issue?
• What is the full written cost (base + any add-ons), and how often is it billed?
• How can I review what was filed and when?

General note: rules and deadlines vary by state and change over time. For specific requirements for your situation, confirm details with the payroll provider and, if needed, an accountant or tax professional.

And a safety reminder: don’t send SSNs, EINs, employee Social Security numbers, or bank account numbers to anyone unless it’s through your chosen provider’s secure process. RunWise Pay only collects contact + business intent details—not sensitive employee records.