At a glance
- Before first payday
- Employer accounts, worker forms, a pay schedule
- Each pay period
- Hours, gross pay, withholding, pay, records
- On a calendar
- Deposits and quarterly filings
- Usually worth it
- Payroll software that files for you
Prices and rules change. Verify every item with the vendor or agency before you rely on it.
Short answer: Running payroll means setting up employer tax accounts before the first hire, then every pay period collecting hours, calculating gross pay and withholding, paying people, and keeping records, plus depositing taxes and filing quarterly reports on time. Most small contractors use payroll software that calculates and files, and keep the approval themselves.
Updated October 12, 2026. Requirements and fees change; confirm with the agency named on this page.
The first employee turns a contracting business into an employer, with a new set of deadlines. Payroll is not hard to run, but the penalties for missed deposits and filings are real. Here is what is involved.
Before the first payday
- Register as an employer with your state agencies. In Washington see hiring your first employee.
- Collect the federal and state forms from the new hire.
- Pick a pay schedule you can keep.
- Decide how you will track hours.
Every pay period
- Collect and check hours, including overtime.
- Calculate gross pay and withholding.
- Approve it yourself, then pay.
- Keep the records.
On a calendar
Tax deposits and quarterly reports to federal and state agencies, each on its own schedule. Put them in your reminders. See every filing deadline a Washington employer has.
Software or a service?
Payroll software that calculates withholding and files the reports removes most of the risk for a small fee per employee. The owner still approves each run; that is a money control you keep.
Know the real cost of an hour
Wages are only part of it. Payroll taxes, workers' comp and paid time off sit on top. The free labor burden calculator shows the real number.
Where Operator fits
Operator is an online mentor for owners doing the office work themselves. It audits the business, checks the foundation, finds the one thing stopping you, and puts payroll on your weekly list with the reason and the next step, for $79 a month. Start with the free Business Audit.
General business information, not tax, accounting or legal advice. Confirm tax and payroll rules with the agency or a CPA.
Want it handled, not just explained?
Operator is the AI business coach for contractors.
A business audit and a plan, an online mentor you can ask any time, team training for your crew, and deadline reminders. $79/month, any state, cancel anytime.
Common questions
Can a small contractor do payroll themselves?
Yes, but most use payroll software that calculates withholding and files the reports. The owner still checks hours and approves each run.
What does a contractor need before running payroll?
Employer registrations with the state and federal agencies, the new hire's tax forms, a pay schedule and a way to track hours.
Should the owner approve payroll?
Yes. In a small shop there is rarely a second check on payroll, so approval stays with the owner.