A payroll system is the difference between paying people and employing people. It calculates withholding, files your returns on schedule, produces the wage statement every California employee is legally entitled to, and keeps a record you can hand a lender, an auditor, or a prime contractor without a week of scrambling.

It is also the single cheapest insurance you can buy against a very expensive problem. Payroll mistakes in California are not usually caught by a letter. They are caught by a claim, and by then the penalties and interest have been running for a while. Getting the system right before your first payday means you never have to go back and untangle it.

• Your federal EIN and your EDD employer payroll tax account number
• Your business bank account details, for funding payroll and paying the tax deposits
• What you plan to pay each person, and whether they are hourly or salaried
• How often you intend to pay. California sets rules on pay frequency and on how soon after a pay period ends the money has to be in hand
• A signed W-4 and DE 4 from each employee, plus a completed Form I-9
• Your workers’ compensation policy, or the knowledge that you still need one