How to Run Payroll for Your First Employee in Montana
You've decided to hire. Congratulations — payroll is now part of your life. Here's the sequence Montana small businesses should follow to make the first hire clean, legal, and on time.
Step 1 — Get your federal EIN
Apply at irs.gov/ein — takes 10 minutes and it's free. Skip services that charge for this; they're reselling free IRS access.
Step 2 — Register with Montana Department of Revenue
Register for state income tax withholding through the TransAction Portal (TAP). You'll get a Montana withholding account number.
Step 3 — Register with Montana Department of Labor & Industry
Register for Unemployment Insurance via UI eServices. You'll get a UI account number and an assigned rate.
Step 4 — Get workers' comp coverage
Contact Montana State Fund (mtstatefund.com) or a private carrier. You'll need estimated annual payroll and job class codes. Coverage must be in place before the employee starts.
Step 5 — Collect new-hire forms
Federal W-4 (income tax withholding).
Montana MW-4 (state income tax withholding).
Federal Form I-9 (employment eligibility) with acceptable ID within 3 business days.
Direct deposit authorization.
State-required new hire reporting to the Montana New Hire Reporting Center within 20 days of hire.
Step 6 — Pick a payroll provider
Gusto, QuickBooks Payroll, ADP Run, Paychex, and OnPay all serve Montana small businesses well. Gusto is the most owner-friendly for a first-employee business.
Cost is typically $40–$80/month base plus $6–$12 per employee. Way cheaper than DIY and the tax filing risk that comes with it.
Step 7 — Run the first paycheck
Enter the employee's info and rate. Confirm withholding tax rates pulled correctly. Confirm your Montana UI rate matches the letter from DOLI. Preview and run.
Verify the direct deposit hit and the tax filings (federal 941, MT withholding, MT UI) show 'filed' in your provider's dashboard.
A quick disclaimer
This article is general information for Montana small business owners, not tax, legal, or accounting advice for your specific situation. Rules change, and how they apply depends on facts we don't know about you. Before acting on anything you read here, talk to a qualified professional. If you're a Montana business owner and want a real conversation about your books, payroll, or tax, that's what Marlow Accounting is here for — call 406-290-1214 or schedule a discovery call.