First Employee? The Pay Records You Now Owe

The day you hire employee #1, you become a payroll department. Most states require giving employees a wage statement every pay period — here's the minimum viable compliance.

What goes on the stub

Pay period dates, gross wages, hours and rate for hourly staff, each deduction named (federal income tax, Social Security 6.2%, Medicare 1.45%, state taxes where applicable), net pay, and YTD totals. Several states — California most strictly — enumerate required fields and penalize omissions.

What you must retain

The FLSA wants payroll records kept at least three years; the IRS says four for employment taxes. Keep what you issued, when, and the math behind it.

Household employers too

Nannies and caregivers past the annual threshold trigger the same duties — the "nanny tax" is Schedule H, and your caregiver deserves proper stubs like any employee.