Pennsylvania payroll setup for your first hire

One worker starts UC. Register within 30 days. This is not a $1,500-quarter test.

L&I’s Office of UC Tax Services, Labor & Industry’s unemployment-tax office, says all employers providing full and/or part-time employment to one or more workers must register. New Pennsylvania employers register within 30 days after services covered by the UC Law are first performed. That is an agency instruction. Confirm it on the live L&I page.

This is not the Texas or Illinois $1,500-quarter test. It is not the 20-week test those states use for ordinary shops. Do not copy those clocks onto Pennsylvania. The Unemployment Compensation Law (Act of December 5, 1936, P.L. 2897, No. 1) is the statute. Certain limited types of work are excluded. If you think the work is exempt, ask L&I for a determination. A payroll login is not a UC account.

L&I’s page uses this agency language for late registration. Employers that fail to file registration documents within the 30-day requirement will be penalized. A 3% Increase for UC Delinquency will be added to the tax rate that would otherwise be assigned. If you fail to register within 30 days after services are performed, you could face a penalty up to the amount of $10,000 per assessment. That is L&I’s wording, not a software figure.

Register on myPATH. L&I still runs the UC account.

Visit mypath.pa.gov for the Pennsylvania Online Business Tax Registration. myPATH is a DOR site. UC accounts are administered by L&I, not Revenue, even though registration rides myPATH. DOR’s business-tax registration page lists unemployment compensation among the accounts you can open there.

After L&I finds you liable, it assigns an Employer Account Number (EAN). Hold that number. Use it on reports and payments. Do not substitute a federal EIN. DOR’s myPATH help says to allow about 48 hours for the UC account email. That email is processed by L&I. Questions about the UC number go to L&I, not DOR.

File the Employer’s Report for Unemployment Compensation (UC-2) in UCMS

Liable employers file UC tax and wage reports electronically through the Unemployment Compensation Management System (UCMS). The quarterly forms are the Employer’s Report for Unemployment Compensation (UC-2) and the wage detail, the Employer’s Quarterly Report of Wages Paid to Each Employee (UC-2A). A UC-2 is not the new-hire report.

L&I’s quarterly-report page says reports and contributions are due at the end of the month following the calendar quarter: April 30, July 31, October 31, and January 31. File even if you paid no wages. Work happens at uctax.pa.gov. The UC-2 instructions name those same forms.

L&I’s 2026 yearly tax highlights set the taxable wage base at the first $10,000 of wages paid to a worker in the calendar year. Use the rate on the L&I notice, not a number from a software page. New-employer figures sit on that L&I page. They still yield to the notice L&I mails you.

State withholding is a flat 3.07 percent. Local earned income tax and local services tax are a separate job.

Pennsylvania withholds state personal income tax from paychecks. DOR’s employer-withholding page says the flat rate is 3.07 percent of compensation. DOR’s tax-rates page lists the same personal income tax rate. Register employer withholding on myPATH. File the Quarterly Withholding Return (W-3) on myPATH. Paper W-3 returns are not accepted. Year-end reconciliation uses Form REV-1667.

Local earned income tax (EIT) is not that state account. A local services tax (LST) often sits beside it. Rates vary by municipality. DCED’s local-withholding FAQs say employees complete a Residency Certification Form on hire. You withhold the higher of the resident EIT rate and the work-location non-resident EIT rate. You also withhold LST. Remit to the local collector for the worksite. One state myPATH account does not cover those locals. See DCED’s employer instructions for the collector job.

New hire is a CareerLink report, 20 days. A UC-2 does not satisfy it.

The new-hire report is a list of who you just hired. It is not a box on the UC-2. 23 Pa.C.S. § 4392 requires the report no later than 20 days from the date of hire. PA CareerLink’s Report New Hires page says the date of hire is the first day services are performed for wages. Report newly hired and rehired employees to the Pennsylvania New Hire Reporting Program. That is L&I’s new-hire service page and 23 Pa.C.S. §§ 4391–4396. A quarterly UC report does not satisfy that clock.

Workplace injury insurance is due when the first employee starts

This is the opposite of a four-employee wait. It is also the opposite of a private-employer choice. Pennsylvania treats coverage as due from the first hire.

BWC’s compliance page says coverage is mandatory for an employer who employs at least one employee who could be injured in Pennsylvania. Narrow exclusions sit on that page and in the Workers’ Compensation Act (Act of June 2, 1915, P.L. 736, No. 338). Unless every worker meets an exclusion, you must insure the liability. That includes limited hours, part-time work, and family members. Buy a policy from a licensed carrier, from the State Workers’ Insurance Fund, or get L&I approval to self-insure. A payroll login is not a policy.

How Gusto and Patriot describe Pennsylvania

Confirm the live myPATH withholding number and the UCMS account with DOR and L&I. Confirm workplace injury insurance on BWC.

Gusto’s Pennsylvania help article says Middesk (Gusto’s business-verification company) may register state income-tax withholding and state unemployment insurance (SUI). Confirm the live numbers on myPATH and in UCMS. Confirm the rate on the L&I notice. Middesk’s standard order does not include local tax agencies. Local EIT, LST, and the Residency Certification Form often still sit on the employer. Gusto’s forms list names the Quarterly Withholding Return (PA W-3), the Employer’s Report for Unemployment Compensation (UC-2), Form REV-1667, a new-hire report, and various local returns. Read Gusto’s Pennsylvania article and Gusto’s forms list. See Gusto on the directory.

Patriot’s tax table says Full Service files Pennsylvania Unemployment Insurance (SUI) on Form UC-2 and Form UC-2A. It files Pennsylvania income-tax withholding on Form PA-W3, Form PA-501, Form PA-501R, and Form REV-1667. It claims all Pennsylvania local taxes. The article does not claim Patriot opens myPATH or UC accounts. Use the unemployment-compensation rate on your L&I notice, not a number from a software page. Read Patriot’s article. See Patriot on the directory.

What still sits on the employer

• Decide that one covered worker has started UC liability. This is not the $1,500-quarter or 20-week test.
• Register on myPATH within 30 days after covered services are first performed.
• Hold the Employer Account Number (EAN) L&I assigns. Do not substitute a federal EIN.
• Enter the rate from the L&I notice, not a marketing figure.
• File UC-2 and UC-2A in UCMS each quarter, even if you paid no wages.
• Register DOR withholding on myPATH. File the Quarterly Withholding Return (W-3). Remit at 3.07 percent unless DOR changes the rate.
• Collect the Residency Certification Form. Withhold local EIT and LST for the worksite collector. One state account does not cover locals.
• File the CareerLink new-hire report within 20 days of the date of hire. A UC-2 does not satisfy that clock.
• Buy workplace injury insurance when the first employee starts. Payroll software does not issue that policy.
• Do not copy another state’s clock onto Pennsylvania. Do not copy Illinois’s $1,500-quarter path onto a one-worker UC shop.

Related guide: Hiring your first employee lists the federal forms that sit next to the one-worker unemployment clock.

Related guide: Can I do my own payroll? covers the federal payday. Local earned income tax is still a separate collector.

Related guide: Independent contractor vs employee is the federal label check before the one-worker unemployment clock.

Related guide: How to pay employees is the paycheck. The 3.07 percent state tax is not the local earned income tax.

Related guide: How to run payroll is the federal payday. Local earned income tax is still a separate amount on that check.

Also forming a company in Pennsylvania? Process Score compares registered agents there.