Last reviewed: July 2026
New Arizona employers need four things in place before that first payroll: a federal EIN from the IRS, a state withholding account with the Arizona Department of Revenue, an SUI account with the Arizona Department of Economic Security, and workers' compensation insurance. Register for all of them as soon as you know you're hiring, since the state accounts can take a week or more to process.
Table of Contents
When you hire your first employee in Arizona, you trigger a series of registration requirements at the federal and state level. Missing any of these steps can result in penalties, delayed payroll, and compliance headaches. This guide walks you through everything, in order.
Registration Overview
Here's a checklist of what every new Arizona employer needs:
- ☑ Federal Employer Identification Number (EIN)
- ☑ Arizona state tax registration (Arizona Department of Revenue)
- ☑ Arizona SUI account (Arizona Department of Economic Security)
- ☑ Workers' compensation insurance
- ☑ New hire reporting setup
- ☑ Payroll system or software
Step 1: Get Your Federal EIN
Your Employer Identification Number (EIN) is your federal tax ID. You need it for federal tax filings, state registrations, opening a business bank account, and running payroll, so get it before anything else.
Apply online at IRS.gov/EIN. It's free, and you typically receive your EIN the same session.
Step 2: Register with Arizona Department of Revenue
Visit the Arizona Department of Revenue website to register for a state employer withholding account. This allows you to withhold Arizona state income tax from employee paychecks and remit it to the state. Once the account is open, have every new employee complete Arizona Form A-4 to choose a withholding percentage between 0.5% and 3.5%; if they don't return it within five days of hire, withhold at the 2.0% default rate until they do.
From the Payroll Desk
Don't wait until your first payroll to register. State registrations can take days or weeks to process. Start the registration process as soon as you know you'll be hiring.
Step 3: Register for SUI
Register for a State Unemployment Insurance account through the Arizona Department of Economic Security (DES). You'll be assigned an employer account number, an initial SUI rate, and a quarterly wage-reporting schedule.
- New employers pay a 2.0% rate for at least their first two calendar years.
- The 2026 taxable wage base is $8,000 per employee, per year.
- Wage reports and payments are filed quarterly through the DES employer portal.
See our Arizona SUI Rates 2026 guide for the full rate schedule.
Step 4: Workers’ Compensation Insurance
Most Arizona employers are required to carry workers' compensation insurance from the day they hire their first employee, and it covers employees who are injured on the job. The Industrial Commission of Arizona (ICA) oversees workers' compensation compliance and labor standards enforcement in the state.
You can obtain workers' comp through private insurance carriers. Compare quotes from a few carriers to find the best rate for your industry classification, since rates vary significantly by the type of work your employees perform.
Starting a Business?
If you haven't formed your business entity yet, get that done before you register for state tax accounts. Most Arizona LLC and corporation filings go through the Arizona Corporation Commission, and you'll need your formation paperwork on hand for the Department of Revenue and DES registrations.
Step 5: New Hire Reporting
Federal and Arizona law require you to report every new hire to the Arizona New Hire Reporting Center within 20 days of their start date. This information is used to enforce child support orders and prevent improper benefit payments.
Reporting is free and can be done online. See our New Hire Reporting guide for the full process and what information you'll need to submit.
Step 6: Set Up Payroll
With all registrations complete, you're ready to set up your payroll system. Look for software that handles both sides of the equation automatically: federal deposits and quarterly Form 941 filings (see our Form 941 guide for how that works), plus Arizona withholding and SUI reporting.
Before your first payroll run, bookmark a couple of tools that make the setup less error-prone: our Arizona paycheck calculator to check gross-to-net math, and our W-4 helper for any new hire who isn't sure how to complete their federal withholding form.
Frequently Asked Questions
How do I register as a new employer in Arizona?
Register for a state tax ID with the Arizona Department of Revenue and for an SUI account with the Arizona Department of Economic Security. You'll also need a federal EIN from the IRS.
When must I register as an employer in Arizona?
You must register as soon as you hire your first employee or, in some cases, when you pay wages above a threshold in a calendar quarter. Register before your first payroll.
Do I need workers' compensation in Arizona?
Most Arizona employers are required to carry workers' compensation insurance. Check with the Industrial Commission of Arizona for specific requirements for your business.
What is an EIN and how do I get one?
An Employer Identification Number (EIN) is a federal tax ID from the IRS. Apply online at irs.gov: it's free and you receive it immediately.
Simplify Arizona Payroll
Gusto automatically calculates, withholds, and deposits both federal and Arizona payroll taxes. It files your quarterly and annual returns, too, and is trusted by over 300,000 small businesses.
Legal & Tax Disclaimer
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 July 2026 and may not reflect recent changes in federal or Arizona 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 Arizona law before making payroll or compliance decisions for your business.