Payroll
New Employer Payroll Setup: Step-by-Step Checklist for 2026
Get your EIN, register with Tennessee, set up withholding, new hire reporting — the complete checklist.
Tennessee has no state income tax, but employers still face SUI, federal tax obligations, and strict labor laws. We cover it all — written for small business owners, not accountants.
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Gusto, QuickBooks Payroll, Paychex, and ADP — compared honestly. Who each product is right for, where each falls short, and what to ask before you sign anything.
Get your EIN, register with Tennessee, set up withholding, new hire reporting — the complete checklist.
New employer rate 2.7%, experienced range 0.01%10.00%, wage base $7,000.
Tennessee minimum wage $7.25/hr. Tennessee has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
Tennessee has no state income tax, but employers still owe SUI on the first $7,000 and must handle federal obligations.
Get your EIN, register with Tennessee, set up withholding, new hire reporting — the complete checklist.
New employer rate 2.7%, experienced range 0.01%10.00%, wage base $7,000.
Tennessee minimum wage $7.25/hr. Tennessee has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
New employer rate 2.7%, experienced range 0.01%10.00%, wage base $7,000.
Tennessee minimum wage $7.25/hr. Tennessee has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
Tennessee has no state income tax, but employers still owe SUI on the first $7,000 and must handle federal obligations.
Get your EIN, register with Tennessee, set up withholding, new hire reporting — the complete checklist.
New employer rate 2.7%, experienced range 0.01%10.00%, wage base $7,000.
Tennessee minimum wage $7.25/hr. Tennessee has no state minimum wage law; the federal minimum of $7.25/hr applies statewide.
IRS classification rules, Tennessee-specific considerations, misclassification penalties.
Gusto vs Paychex vs QuickBooks vs ADP — detailed comparison for Tennessee small businesses.
Trustpilot ratings — public, updated continuously. ADP: 1.2/5 from 12,000+ reviews. Paychex: 1.3/5 from 4,000+ reviews.
"Called four times about a billing error. Each rep told me to call back. Still unresolved after six weeks."
"They misfiled our 941 and then charged us a correction fee. Support transferred me three times. Nobody owned the problem."
Pacific Data Services has been running payroll since 1969. They work with businesses from 1 to 500 employees. Three options: log into their system and run payroll yourself, send hours by phone or email and let PDS handle data entry, or use their system only for reports while they do everything else. You don't have to learn new software. That's a real option, not a sales line.
On pdspayroll.com — family-owned payroll company, not a national chain.
Gusto handles payroll calculations, tax filings, and direct deposit automatically. Trusted by 300,000+ small businesses. Start with a free trial — no credit card required.
On Gusto’s website — Tennessee Payroll Guide may earn a commission at no cost to you.
LegalZoom handles your Articles of Organization, registered agent, and operating agreement — all online. Trusted by 4M+ small business owners. Starts at $0 + state filing fees. (LegalZoom does not process payroll — see PDS or Gusto above for that.)
On LegalZoom’s website — Tennessee Payroll Guide may earn a commission at no cost to you.
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of the date noted above and may not reflect recent changes in federal or Tennessee state law. Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Tennessee law before making payroll or compliance decisions for your business.
Tennessee has no state income tax on wages. The Hall Income Tax, which taxed investment income like dividends and interest, was fully repealed on January 1, 2021. As of 2026, there's no state income tax of any kind to withhold or file. No state W-4, no state withholding registration, no state income tax returns for employees. Tennessee employees take home the same gross wages on the income tax side regardless of which Tennessee county they work in. This makes Tennessee payroll processing among the simplest in the country from a tax withholding perspective.
Tennessee's minimum wage is $7.25/hr, matching the federal floor. The state has not raised its minimum wage above federal since the 1970s, and there's no current legislation to change it. Tennessee state law actually preempts local governments from setting their own minimum wage ordinances, so Memphis, Nashville, and Knoxville all remain at $7.25/hr. Tipped employees can be paid $2.13/hr, the federal tipped minimum, provided tips bring total hourly compensation to $7.25/hr. Employers must make up any shortfall in the applicable workweek.
Unemployment insurance is administered by the Tennessee Department of Labor and Workforce Development (TDLWD). The SUI taxable wage base for 2026 is $7,000 per employee—one of the lower bases in the country. New employers pay 2.7% for their first two to three years. Experience-rated employers range from 0.01% to 10.0%. Quarterly SUI returns are filed through the TDLWD online portal and are due April 30, July 31, October 31, and January 31. Register for a TDLWD account before your first payroll. New hire reporting goes to the Tennessee New Hire Reporting Center within 20 days of hire.
Tennessee doesn't have state disability insurance or a state-run paid family and medical leave program. Compliance is largely federal: FLSA overtime requirements, FUTA, Form 941, and W-2 deadlines. One state-specific item to note: Tennessee has a wage payment act that requires employers to pay on a semi-monthly schedule unless the employee agrees to a different frequency in writing. Payroll frequency matters here and it's sometimes overlooked by employers coming from states without statutory pay frequency requirements.
For 2026, the federal payroll picture is: FICA at 7.65% each side, Social Security cap at $176,100, Medicare with no cap (plus 0.9% surtax above $200,000), FUTA net 0.6% after credit, Form 941 quarterly, and W-2s by January 31, 2027. Tennessee employers who operate across state lines should be careful about workers who commute from Georgia, Alabama, or Kentucky—those employees' wages may be subject to the other state's income tax withholding requirements.
More information in our guides on Tennessee payroll taxes, 2026 SUI rates, and payday frequency rules.
Complete Tennessee compliance guide — SUI (0.01%–10%, new employer 2.7%), $7,000 wage base, no state income tax on wages, right-to-work state, workers comp at 5+ employees, and final paycheck rules.
Quarterly deadlines, line-by-line walkthrough, deposit schedules, how to amend with Form 941-X, and penalties for late filing.
Minimum wage, overtime thresholds, white-collar exemption tests, child labor rules, recordkeeping, and DOL audit triggers.
New hire, every-payroll, monthly, quarterly, and annual federal compliance tasks in one organized checklist.