Get an EIN
Apply for an employer identification number from the IRS. You need it for the W-2 and Schedule H.
Withhold and pay
Withhold the employee's 7.65% FICA and pay your matching 7.65%. You never have to withhold income tax; you do it only if the employee asks and you agree. If you pay $1,000 or more in cash wages in any calendar quarter, you also owe federal unemployment tax (FUTA).
Give a pay stub each payday
Many states require a written wage statement. A stub showing hours, rate, taxes and net pay protects you and the employee.
Year end
Issue a W-2 by January 31 and file Schedule H with your Form 1040.