Am I Required to Register as an Employer?
- Two Types of Employers
- When Does a Business Become Subject to State Payroll Taxes?
- When Does an Employer of Household Workers Become Subject to State Payroll Taxes?
- Registration Process
- Important Registration Tips
- What Happens After EDD Receives Your Registration?
- Employer Responsibilities
- State Income Tax Withholding
- Sole Corporate Shareholder Exclusion
- Resources for New Business Owners
Two Types of Employers
- Employers who run a business can be a person or a legal entity and include:
Nonprofit and Charitable Organizations
Limited Liability Companies
Limited Liability Partnerships
Public Entities (including state and federal agencies)
Associations and Trusts
- Household Employers who hire household workers can be:
Local College Clubs
Local Chapters of College Fraternities or Sororities
When Does a Business Become Subject to State Payroll Taxes?
Generally, a business becomes subject to State payroll taxes upon paying wages over $100 in a calendar quarter to one or more employees. Wages consist of compensation for services performed, including cash payments, commissions, bonuses, and the reasonable cash value of noncash payments (like meals and lodging) for services. Once subject, an employer must complete and submit a registration form to EDD within 15 days. Please go to the Registration Process section below and select the link to the specific registration form for your type of business.
Examples of when a business becomes subject:
- A sole proprietor hires an employee during the month of March at a wage of $75 per month. The employer is subject effective April 1 since the employer did not pay the employee over $100 during the first quarter of the year (January-March) but will pay over $100 during the second quarter (April-June).
- A corporation operates without any employees except for the corporate president. The corporation is an employer and is required to register if the corporate president is paid wages of over $100 in a calendar quarter.
- A two-person partnership operates a business in which each partner draws a salary of $1,000 during the first quarter of the year. When one partner goes on vacation, an employee is hired and paid $95 during the quarter. The partnership is not required to register as an employer since partnership draws are not considered wages and the employee who was hired did not receive wages of over $100 in the calendar quarter.
When Does an Employer of Household Workers Become Subject to State Payroll Taxes?
An employer of household workers must report when he/she employs one or more individuals to perform work and pays cash wages of $750 or more in a calendar quarter. You must register with the Employment Development Department (EDD) by submitting a Registration Form for Employers of Household Workers (DE1 HW) within 15 days after you pay $750 in total cash wages. An online registration process is also available using the expanded e-Services for Business, available from the e-Services for Business page.
Household Employers can obtain more detailed information on their reporting requirements from the following publications:
You can also call the Taxpayer Assistance Center at (888) 745-3886.
You can register online and, upon successful registration, you will receive a California Employer Account Number and tax rate information immediately using the expanded e-Services for Business, available from the e-Services for Business page.
You can download a registration form using the links below or order one through the Online Forms and Publications page. You can also call (888) 745-3886 or visit your nearest Employment Tax Office to obtain one. Please complete the registration form for your type of business:
- Commercial Employers, Pacific Maritime, and Fishing Boats (DE 1)
- Agricultural (DE 1AG)
- Governmental Organizations, Public Schools, & Indian Tribes (DE 1GS)
- Nonprofit Employers (DE 1NP)
- Personal Income Tax Withholding Only (DE 1P)
- Employer of Household Workers (DE1HW)
You can also register by telephone by calling EDD’s Tele-Reg service at (916) 654-8706. Please make sure to have a completed DE 1 registration form available when you call. You will receive your EDD employer account number over the telephone and your new employer packet by mail.
Important Registration Tips!
Include your federal employer identification number (FEIN) on the registration form to ensure unemployment insurance tax credits apply correctly when claimed on your Employer’s Annual FUTA Tax Return (IRS Form 940). For information on federal filing requirements, contact the IRS.
Mail or fax your completed registration form to the address or fax number below. The address and fax number are also listed at the top of the registration form for your convenience.
Employment Development Department
Account Services Group, MIC 28
PO Box 826880
Sacramento CA 94280-0001
Fax (916) 654-9211
What Happens After EDD Receives Your Registration?
After EDD receives your registration form, you will receive an eight-digit employer account number (example: 000-0000-0), also known as a State Employer Identification Number, SEIN, State ID number, or reserve account number. This number will be printed on all reporting forms sent to you and on all notices relating to former employees. Use it in all correspondence with EDD. If a bank or payroll service prepares your return, be sure to provide them with your employer account number.
You will receive the following information by mail:
- New Employee Registry letter
- Report of New Employee(s) (DE 34)
- California Employer’s Guide (DE 44)
- New employer packet that contains:
A personalized Payroll Tax Deposit (DE 88) coupon booklet will be mailed to you 4 - 6 weeks after you register.
Reporting wages paid to your employees and State Personal Income Tax (PIT) withheld from their wages.
Paying Unemployment Insurance (UI) and Employment Training Tax (ETT) on your employee’s wages, as well as withholding and remitting State Disability Insurance (SDI) and Personal Income Tax (PIT) due on wages paid to your workers (see Rates, Withholding Schedules, & Meals and Lodging Values).
You must also report all new employees to the New Employee Registry within 20 days of their start-to-work date.
If you use the services of independent contractors, you may also have to report them.
State Income Tax Withholding
Encourage your employees to withhold the correct amount of State income tax by having them fill out a California Employee’s Withholding Allowance Certificate (DE 4) in addition to the federal Form W-4. You can download the DE 4 or use the online calculator. Links to the State income tax withholding schedules are available on the Rates & Withholding page.
Sole Corporate Shareholder Exclusion
If you are a corporate officer and the sole shareholder (or the only shareholder other than your spouse) of a private corporation, you can elect to be excluded from State Disability Insurance coverage for benefits and contributions; see Sole Shareholder/Corporate Officer Exclusion Statement (DE 459).
Resources for New Business Owners
- CalGOLD - Business Permits Made Simple ("One Stop" state, local, regional, and federal permit, licensing, and tax requirements.)
- Striking Gold in California - What You Need to Know About Taxes and Your Small Business.
Supplement to Striking Gold (EDD) 2011 Updates
- California Tax Service Center - Guiding Taxpayers to the Forms and Services They Need (Simplified income, payroll, and sales and use tax information.)
- Changes to My Business - Purchasing a Business with Employees (When you are buying or acquiring an existing business.)
For assistance, call our toll-free number (888) 745-3886 or visit your local Employment Tax Office.
- e-Services for Business
- Register as an Employer
- File and Pay Taxes
- Rates and Withholding
- Forms and Publications
Top Links This Month
- Forms and Publications
- File and Pay Taxes
- e-Services for Business Information
- Rates and Withholding
- Am I Required to Register as an Employer