Running payroll for the first time is an accomplishment to be proud of. Your business is earning enough to support employees; you’ve chosen your payroll provider and set everything up; you’ve sent out the first paychecks.
While it’s a milestone to celebrate, it’s also the beginning of the next phase: tackling the administrative work that goes along with having employees. Your first payroll run is a launchpad for adding benefits, taking care of your growing team, and making sure you’re compliant and insured.
Because you already have payroll in place, each next step can be much easier.
We’ve broken down what to think about after running payroll for the first time into five manageable steps below.
1. Build benefits that bring people in and keep them
Small teams need good employee benefits like health insurance, retirement savings accounts, and extra perks just as much — or maybe even more — than the big companies. You’ve carefully chosen your hire(s), and invested time and money into onboarding and training. You’re vying for employee loyalty, and if you plan to grow, you’ll be competing for more good talent. In 2024, small businesses that offered health insurance were 13% more likely than those offering other benefits (but not health insurance) to say they didn’t have issues finding employees. Even if you’ve hired a friend or family member, a solid benefits package makes it easier for them to stay with you.
Your investment pays off in productivity gains, too: Small business owners who offer health insurance (and no other benefits) are 25% more likely to say that their employees have exceeded their expectations.
Wondering which benefits to include in your package? Consider these three main categories:
Health coverage (medical, dental, and vision). According to the 2025 SHRM Benefits Survey, employers consider health care to be the most vital benefits offering, with 88% of HR leaders saying health care is “very important” or “extremely important.”
Retirement benefits. Helping employees save for their future isn’t just altruistic; it also has retention value. 73% of employers say a 401(k) has positively impacted their ability to retain talent.1 And with convenient, affordable plan options out there, you’ll find setting up your first 401(k) is a lot easier than you thought.
Extra perks (Disability, HSA, FSA, commuter benefits, etc.). These perks, while not always the highest ranked, can put the cherry on top of your other benefits. If you have extra room in the budget, consider offering these tax-advantaged accounts for employees.
Gusto makes it easy to offer benefits as a small business. You don’t have to do the math around how much to deduct or sign into a second system; Gusto automatically handles benefits and deductions straight from payroll.
Explore Gusto’s small business benefits solutions.
2. Grow your team the right way
After hiring your first employee, you’re ready to systematize your hiring process. It’s typical (and acceptable, as long as you check all the legal boxes) for the first hiring to be haphazard. But as you start managing more interviews and hire more employees, it will get harder to keep everything straight in your head.
As your team grows, you’ll also want to establish a few HR basics: a PTO policy and an employee handbook. These can overlap with compliance requirements (see step 4), but here, you can focus on the administrative groundwork.
Take these next steps after hiring your first employee:
Support your compliance efforts by using an applicant tracking system to track and organize offer letters, I-9 verifications, W-4 tax documentation, and new hire reporting by state for each hire.
Define your PTO policy, including sick leave.
Draft an employee handbook that outlines your policies (PTO, expense reimbursement, types of paid leave, etc.), and makes expectations clear between you and your employees from the beginning.
With Gusto, you can send offer letters, gather e-signatures, collect I-9s and W-4s, and store documents in one system. Once your new hire’s documents and signatures are squared away, you can immediately add them to payroll.
With Gusto’s applicant tracking system, you have access to a dedicated team of HR pros. Learn more.
3. Protect your growing business
In nearly every state, you are required to have workers’ compensation coverage the moment you have an employee on payroll. If this is something you’ve already established - way to go! If not, setting up workers’ comp should be your next step after hiring your first employee.
By integrating workers comp with your Gusto payroll, you can access pay-as-you-go method. With this approach, premium payments are based on each actual payroll run and spread across the year, so there's less to reconcile at year-end. This is far easier than traditional models, where you have to share estimated payroll costs at the beginning of the year, and audit at year-end against the actual payroll.
With Gusto, you can also purchase other forms of insurance to protect your business. While workers’ comp provides coverage for employees for on-the-job injuries, you may want to protect against third party claims and other risk exposures.
General liability. Covers third-party claims of bodily injury, property damage, and advertising injury.
Professional liability (errors & omissions). Covers claims that your advice, service, or work caused a client financial harm.
Commercial property. Covers your owned and leased physical assets in the event of damage.
Business owner’s policy. Combines general liability and commercial property coverage into one policy.
Learn more about Gusto’s business insurance offerings.
Within Gusto, admins have access to a Business Insurance Hub that lets you apply for and purchase policies tailored to your business in just a few minutes.
4. Support your compliance work without the dread
Being an employer means you have to worry about compliance: taxes, labor laws, retirement, and health coverage. But with the right support, this will become like second nature to you. Check these items off your small business compliance checklist:
Taxes. With payroll comes payroll tax filing. But that’s one major perk of using a payroll provider like Gusto. Your local, state, and federal payroll taxes are calculated, filed, and paid automatically.
Labor laws (wages and hours, posters, and sick leave). If you hire hourly employees, you need to comply with state and federal minimum wage law. You also need to provide all employees with certain labor law posters and notices, even if they’re remote. Some states also require employers to provide mandatory sick leave.
Retirement. Many states have adopted retirement mandates, even for businesses with just one employee. Check to see if the state where your employee is living or working requires that you offer a plan. If you have more than 10 employees, you may be subject to SECURE 2.0 auto-enrollment requirements as well.
Health coverage. When you have 50+ full-time employees, you will be subject to Affordable Care Act requirements. For now, you can prepare by choosing an ACA-compliant plan and sending out new-hire notices about the Health Insurance Marketplace.
Gusto takes care of your payroll taxes. For anything that needs your input (like state retirement mandates or updated labor law requirements), Gusto will flag it and point you to the right next step.
See whether your employee’s state has a retirement mandate.
5. Take care of your team beyond payday
If you have hourly employees, you can help them by providing them with tools to manage their hours. These tools make it easier for employees to manage their own work, but it also means that you may be able to import hours directly into payroll. If you add contractors to the mix, you may also want to align their payments with payroll so that you don’t have to enter information manually every time.
Choosing a payroll provider that offers a financial app for employees can be another form of benefit for employees. It can provide financial steadiness between paychecks through tools like spending accounts, budgeting tools, and early pay.
Gusto offers a mix of tools to support your hourly and contract employees, like time tracking, contractor payroll, and a Gusto Spending Account with personal savings goals through Gusto Wallet (issued by nbkc bank, Member FDIC). For times. When cash flow gets tight, a Payroll Bridge line of credit — powered by Parafin — gives approved customers a way to fund payroll now and repay over time, with no credit check and a transparent, flat fee.2; 3
Payroll is a launchpad
Once you’ve got payroll in place, you’re ready: select your suite of benefits and tools to help employees and yourself. With Gusto Payroll, you’ve got easy access to the extras you want to offer. Hand these workflows off to Gusto and get back to growing your business — with Gusto there to support you along the way.
Get started with Gusto today. Don’t have payroll in place yet? Review our complete guide to managing payroll for your small business.
FAQs
How many employees do I need before workers' comp is required?
In most states, you only need to have one employee on payroll before workers’ comp is required. A handful of states set the threshold at two to five employees, and Texas allows most employers to opt out entirely. Check your state's rules to see if you need workers’ comp. Waiting too long could risk fines and leave you with uncovered liability.
What benefits am I required to offer employees at a small business?
Very few benefits are federally required, but these include Social Security and Medicare contributions, unemployment insurance, and workers' comp (governed by each state). Depending on your employee’s state, you may also owe paid sick leave or access to a retirement plan. Health insurance and a 401(k) are optional, but matter for retention.
How do I set up health insurance for my employees?
To offer health insurance to your employees, you’ll need to choose a group health plan through a broker or your payroll provider, decide how much of the premium you'll cover, and open enrollment for employees. If you manage it through payroll, contributions are deducted automatically each pay period.
What happens to payroll taxes after I run payroll?
The taxes withheld from employee paychecks — plus your employer share — must be deposited with the IRS and your state on a monthly or semi-weekly schedule. You'll also file Form 941 each quarter. With a full-service payroll provider like Gusto, calculation, filing, and payment happen automatically.
Do I need an employee handbook for a small business?
No federal law requires an employee handbook, but it's one of the most practical administrative tools you can put in place early. A handbook documents your PTO, leave, and conduct policies — protecting you and reducing confusion as your team grows. Some states also require written notice of specific policies, like paid sick leave.
Disclosures
1Research run by Gusto Retirement (formerly Guideline) using Suzy research insights. Based on data collected Dec 2023–Jan 2024, from a survey of 776 US-based respondents. Guideline was not identified as the survey sponsor. Though the survey is broad in scope, the experiences of the respondents in this survey may not be representative of all people.
2Gusto is a payroll services company, not a bank. The Gusto Cash Account, savings goals, spending account, and debit card offered through Gusto Wallet are issued by nbkc bank, Member FDIC.
3For Vermont residents: THIS IS A LOAN SOLICITATION ONLY. GUSTO, INC. IS NOT THE LENDER. INFORMATION RECEIVED WILL BE SHARED WITH ONE OR MORE THIRD PARTIES IN CONNECTION WITH YOUR LOAN INQUIRY. THE LENDER MAY NOT BE SUBJECT TO ALL VERMONT LENDING LAWS. THE LENDER MAY BE SUBJECT TO FEDERAL LENDING LAWS.
Gusto provides access to Payroll Bridge through our partnership with Parafin. Payroll Bridge is offered by Parafin, not Gusto. Gusto does not review applications, make credit or lending decisions, provide credit, service loans, or collect repayments.
All lines of credit are subject to application completion and review.
