U.S. Payroll Compliance for Foreign-Owned Companies

The short answer

A company needs an EIN before it can hire and run payroll in the United States.
Employers withhold federal income tax, Social Security and Medicare from wages, and pay employer taxes, including federal unemployment tax.
Most employers file Form 941 every quarter and Form 940 every year. Recipient statements such as Form W-2 are generally due by January 31.
The IRS decides whether a worker is an employee or a contractor by weighing behavioral control, financial control and the type of relationship.
Employers use Form I-9 to verify the identity and work authorization of every new employee.

Table of contents

Start with the EIN and a bank account
What an employer handles
Forms and calendar
Eligibility to work
Employee or contractor
Using a payroll provider
Keep payroll in your books
How MyUSAService helps
Frequently asked questions

Hiring someone in the United States is not the same as sending them a payment. The moment a company has an employee, it becomes an employer, with tax obligations, registrations and paperwork that run every quarter and every year.

This guide covers workers in the United States. Payments to workers located outside the United States follow other rules and are not covered here.

Start with the EIN and a bank account

The EIN identifies the company for tax purposes and is needed to open a bank account, file employment tax returns and report wages. A company owned by a non-resident can obtain it by phone, fax or mail: see our guide to non-resident compliance. Payroll also needs a U.S. bank account from which to pay wages and taxes.

What an employer handles

Withholding. From each paycheck, the employer withholds federal income tax and the employee’s share of Social Security and Medicare taxes.
Employer taxes. The employer pays its own share of Social Security and Medicare, and federal unemployment tax.
State obligations. States set their own income tax withholding, unemployment insurance and registration rules. Register in the state where the employee works.
Deposits. Employment taxes must be deposited on time and by the required method.

Forms and calendar

Form 941, the employer’s quarterly federal tax return, for most employers.
Form 940, the annual federal unemployment tax return, for most employers.
Form W-2 for each employee, and the other recipient statements, generally due by January 31.
State returns, with their own deadlines.

The IRS publishes the full list of due dates. Missing filings can lead to penalties and interest, as described in our guide to IRS penalties.

Eligibility to work

Employers use Form I-9 to verify the identity and the authorization to work of every new employee, and keep the form on file. Ask your payroll provider or an employment lawyer how to handle it when the employer is based abroad.

Employee or contractor

Calling someone a contractor does not make them one. The IRS looks at the whole relationship, grouped in three categories:

Behavioral: does the company control, or have the right to control, what the worker does and how?
Financial: does the company control the business side of the job, such as how the worker is paid, whether expenses are reimbursed and who provides tools?
Type of relationship: are there written contracts or employee-type benefits, and is the relationship ongoing and the work a key part of the business?

No single factor decides the case. Misclassification can lead to back taxes and penalties, so decide with a professional before you pay the first invoice. [Probabile]

Using a payroll provider

Many small companies use a payroll provider. Ask:

Which states it covers, and whether it registers you with them.
Which federal and state returns it prepares and files.
Whether it works with employers owned from abroad.
What happens if a return is late because of your delay.

Keep payroll in your books

Payroll runs through the company’s bank account and creates monthly records. Keep them with the rest of your bookkeeping, so tax returns and filings agree. Our guide to U.S. business taxes explains how employment taxes fit with the rest.

How MyUSAService helps

MyUSAService helps with the EIN application and offers bookkeeping at $279 per month, which keeps payroll records organized. Prices as of September 2026. Payroll processing itself is done with a payroll provider or a professional: ask us or your tax professional for the right choice for your case.

Frequently asked questions

Do I need an EIN to hire in the United States?

Yes. The EIN is needed to file employment tax returns and report wages.

What payroll forms does a U.S. employer file?

Most employers file Form 941 every quarter and Form 940 every year, and give each employee a Form W-2, generally by January 31. States have their own returns.

Can I pay U.S. workers as contractors to avoid payroll?

Only if they really are contractors. The IRS weighs behavioral control, financial control and the type of relationship.

Do I need to verify a new employee’s eligibility to work?

Yes. Employers use Form I-9 for every new employee.

Does my foreign-owned LLC need a U.S. bank account for payroll?

Payroll normally runs from a U.S. bank account, used to pay wages and deposit taxes.

Hiring in the U.S.? Check your payroll obligations

Talk for 30 minutes, free of charge, with a MyUSAService consultant.

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We outline registrations and filings you need

Sources

First published July 25, 2025. This article is general information, not tax advice for your situation. Bookkeeping and accounting | Book a free call