How to set up US payroll from India: EIN, state registration, providers

Once your Delaware C-Corp hires its first US employee, you trigger federal and state payroll tax obligations within days. US payroll spans IRS withholding and FICA (Social Security and Medicare), federal unemployment (FUTA), and state income tax withholding, state unemployment insurance (SUI), and local taxes where applicable. The state where the employee works determines the state tax stack, not where the company is incorporated. A Delaware C-Corp with a California employee runs California payroll, not Delaware payroll.

Confirm your EIN is active. Determine your deposit schedule for federal payroll taxes: monthly schedule depositors deposit by the 15th of the following month; semiweekly depositors deposit within three banking days of the payroll. Most new employers start on the monthly schedule. File Form 941 quarterly to report federal income tax withheld, Social Security and Medicare taxes (employer and employee shares). File Form 940 annually for FUTA. Collect Form W-4 from each employee for federal withholding, and Form W-9 from US contractors before paying them. Issue Form W-2 by 31 January and Form 1099-NEC by 31 January.

For each state where you have employees, register as an employer with the state's Department of Revenue (for income tax withholding) and Department of Labor or Workforce Agency (for unemployment insurance). Examples: California requires registration with the EDD; New York with the Department of Taxation and Finance and Department of Labor; Texas has no state income tax but requires SUI registration. Most states issue a state tax ID and SUI account number within a few weeks. Register before the first paycheck.

Payroll providers handle the mechanics: tax calculation, deposits, filings, W-2/1099 issuance. For US-employees-only, Gusto is the most-used full-service payroll for startups (USD 40 base plus USD 6 per employee per month). Justworks and Rippling bundle benefits, HR and PEO services. For a mix of US employees and international contractors, Deel and Remote handle both. For Indian founders running a Delaware C-Corp, Gusto or Rippling for US payroll plus Deel for international contractors is a common stack. The provider files state and federal returns on your behalf.

Most states require workers' compensation insurance for employees (Texas is the notable exception). Pricing depends on payroll size and risk class; some payroll providers bundle workers' comp. If you offer health insurance, the employer share is added to payroll cost. For 50+ full-time employees, ACA reporting (Forms 1094-C/1095-C) kicks in. Track new-hire reporting to each state's new-hire registry (within 20 days of hire in most states). Maintain I-9 records on file for each employee (eligibility-to-work verification). Many of these get missed by founders running payroll remotely from India.

Do I need a US-based HR person to run US payroll?
No. A capable founder using Gusto or Rippling can run US payroll from India for a small team. As headcount grows (20+ employees), an HR ops person or fractional HR helps with benefits administration, employee relations and multi-state compliance.

Can I pay US contractors instead of hiring employees?
Yes, with caution. Misclassification (treating an employee as a contractor) triggers back taxes, penalties and benefits exposure. The IRS and many states apply economic-realities and right-of-control tests. Contractors who work full-time for one client, get direction on how to work, and use your tools usually fail the test.

What is the difference between W-2 and 1099?
W-2 is the year-end form for employees showing wages and withholding. 1099-NEC is the form for non-employee contractors who received USD 600+ during the year. The classification decision (employee vs contractor) determines which form, payroll-tax exposure and benefits obligations.

Do I need a US office address for state registration?
Not always. Many states accept the company's registered agent address or virtual office. The state cares about the employees' work location for tax purposes. Some states require a physical presence for certain registrations; check state-by-state.

How do US payroll deposits actually move from India?
Through your US business bank account. Connect Mercury or Brex to your payroll provider; the provider drafts the payroll amount plus tax deposits from your bank account each pay cycle and handles the IRS and state deposits. Fund the account adequately ahead of payroll dates.

What about Indian founders working for the US C-Corp?
An Indian founder who is an India-resident performing work for the US C-Corp from India typically receives consulting fees, not US payroll. India-side TDS (10% under Section 194J commonly) applies and the founder includes the income in their Indian return. US payroll is for employees physically working in the US.