Register as an Employer With EDD in California: 15 Days, New Hire Reports in 20 Days, 2026 Payroll Tax Rates
Register as an Employer With EDD in California: 15 Days, New Hire Reports in 20 Days, 2026 Payroll Tax Rates
The day you pay your first employee, you take on four state obligations: register with the Employment Development Department (EDD), report the new hire, withhold and pay payroll taxes, and file on a calendar that does not move for your convenience. This guide covers them in the order you will hit them, with the 2026 rates and due dates you need to set up payroll correctly.
This content is informational only. It is not legal, tax or payroll advice. Confirm your obligations with EDD, a CPA or an employment attorney before you act, especially if you use contractors, have employees in other states or have an unusual pay arrangement.
When you must register with EDD
A business must register with EDD as an employer within 15 days of paying more than $100 in wages in a calendar quarter. Registration has no fee and is completed online through EDD e-Services for Business. Do not wait for your first full payroll cycle. Register as soon as you have a hire date.
Your EDD employer account is separate from your other registrations. Each one serves a different purpose:
- Federal EIN: issued by the IRS for federal tax reporting. EDD does not issue it, and the EDD account does not replace it.
- CDTFA seller's permit: needed only if you sell taxable goods. It is not a payroll registration, and the permit is free.
- Entity registration: your LLC or corporation is formed with the California Secretary of State, Business Programs Division. This is a separate step from payroll.
California has no general state business license. The Secretary of State issues none, and the seller's permit is not a business license. Your city may require a local business tax or registration certificate, and most cities do. The requirement and the amount depend on the city, so check yours before you open for business.
Report each new hire on form DE 34 within 20 days
Within 20 days of an employee's start date, file a Report of New Employee(s), form DE 34. You have three ways to file it:
- Enter the report directly in EDD e-Services for Business.
- Complete the fill-in DE 34 PDF available from EDD.
- Attach the required details to a copy of the employee's federal Form W-4 or the state form DE 4.
The new hire report is used for child support enforcement, not for computing your taxes. It is easy to miss because nothing visibly breaks when you skip it, so put the 20-day deadline on the calendar the same day you make the offer.
Independent contractors: DE 542 and Form 1099-NEC
When a business pays or agrees to pay an independent contractor $600 or more, EDD requires a Report of Independent Contractor(s), form DE 542, within 20 days. The DE 542 is a child support tracking report. It is not a tax form.
The federal Form 1099-NEC is a tax information return. The federal reporting threshold is $2,000 for payments made after 2025. The EDD and federal thresholds are different, so confirm both with EDD and the IRS before you pay your first contractor. Also confirm whether a worker is an employee or a contractor, since that classification drives everything in this guide. A CPA or employment attorney can help with that call.
2026 California payroll tax rates and who pays each
Four payroll taxes and withholdings apply to most first-time employers. Two are paid by the employer. Two come out of the employee's paycheck. Only the employer pays UI and ETT, and neither is withheld from employee pay.
| Tax | 2026 rate | Wage base | Who pays |
|---|---|---|---|
| Unemployment Insurance (UI) | New employers are assigned 3.4% for their first two to three years. After that, the rate follows your claims history under Schedule F+, which runs from 1.5% to 6.2% for 2026. | First $7,000 of each employee's wages per calendar year | Employer only |
| Employment Training Tax (ETT) | 0.1% | First $7,000 of each employee's wages per calendar year | Employer only |
| State Disability Insurance (SDI) | 1.3% in 2026 | All wages. There is no wage cap since January 1, 2024. | Employee, withheld from pay |
| Personal income tax (PIT) | Graduated rates, withheld based on the employee's federal Form W-4 and state form DE 4 | Based on the employee's withholding information | Employee, withheld from pay |
For PIT, the employee's federal Form W-4 and state form DE 4 set the withholding. If an employee does not give you a valid DE 4, withhold as if the employee is single with zero allowances. Each December, EDD mails the Notice of Contribution Rates (DE 2088) with your UI and ETT rates for the coming year. Check that notice against your records instead of relying on last year's numbers.
What it costs in practice
Here is a computed example for one employee paid $50,000 in 2026, assuming the 3.4% new employer UI rate applies:
- UI: 3.4% of $7,000 is $238, paid by the employer.
- ETT: 0.1% of $7,000 is $7, paid by the employer.
- SDI: 1.3% of $50,000 is $650, withheld from the employee's pay.
This is an illustration, not a quote from EDD. Your actual UI rate may differ once you are past your new employer period, and PIT withholding depends on each employee's forms. Do not use these figures to budget for 2027. EDD announces 2027 rates later, so check EDD when they are published.
Filing and deposit calendar for 2026
Each calendar quarter, file the Contribution Return and Report of Wages, form DE 9, along with the continuation form DE 9C when you need it for additional employee detail. EDD requires electronic filing and payment, so set up your e-Services account before the first deadline arrives. A payroll service can file on your behalf, but you remain responsible for the accuracy and timing of every filing.
| Quarter | Wages paid | Due | Delinquent after |
|---|---|---|---|
| Q1 2026 | January 1 to March 31, 2026 | April 1, 2026 | April 30, 2026 |
| Q2 2026 | April 1 to June 30, 2026 | July 1, 2026 | July 31, 2026 |
| Q3 2026 | July 1 to September 30, 2026 | October 1, 2026 | November 2, 2026 (weekend rule) |
| Q4 2026 | October 1 to December 31, 2026 | January 1, 2027 | February 1, 2027 |
Deposits of withheld PIT, SDI and employer taxes are made with form DE 88 monthly, on the 15th of the following month. Small accounts may instead deposit with the quarterly return. An employer that withholds more than $350 in PIT may have to deposit more often. Check EDD's deposit requirements table at edd.ca.gov to confirm which schedule applies to you before your first payroll runs.
The penalty for missing reports is specific. If you do not report an employee on the DE 9C after EDD issues a 15-day demand, you owe a $20 penalty for each unreported employee. The cost is small per person, but it compounds quickly across a growing staff, and it is easier to avoid than to fix.
Paid sick leave under Labor Code 246
Under Labor Code 246, an employee who works 30 or more days within a year for the same employer is entitled to paid sick days. You may meet the accrual requirement in one of three ways:
- Accrue at least 1 hour of paid sick time for every 30 hours worked.
- Use the alternative accrual: make 24 hours or three days available by the 120th day of employment, and 40 hours or five days by the 200th day.
- Give the full 40 hours or five days at the start of each year.
Employees may use accrued days starting from the 90th day of employment. You may cap use at 40 hours or five days per year. Keep records of accrual and use, since these are the first things an audit will ask for.
City ordinances can add requirements on top of the state rules. San Francisco and Los Angeles, among others, have their own paid sick leave laws with different terms. Check your city before you write your policy, and use the stricter rule where state and city rules differ.
Related employer topics
Once you are registered and running payroll, four related topics usually come up next: the statewide minimum wage, workers' compensation insurance, the CalSavers retirement program and the SB 553 requirements. The state minimum wage is $16.90 in 2026 and $17.40 starting January 1, 2027. Treat those figures as a starting point and verify them before you set pay rates.
Your first-hire checklist
- Register with EDD within 15 days of paying more than $100 in wages in a calendar quarter. Register before the first paycheck if you can.
- File the DE 34 within 20 days of each employee's start date, and the DE 542 within 20 days for any contractor paid $600 or more.
- Set your PIT withholding from each employee's W-4 and DE 4, and withhold as single with zero allowances if no valid DE 4 is on file.
- Set up your DE 88 deposit schedule and calendar each DE 9 due date from the table above.
- Check your city's business tax rules and paid sick leave ordinance.
This guide is informational and is not legal, tax or payroll advice. EDD, the IRS and your city set the final rules, and those rules change. Work with a qualified CPA or employment attorney for complex situations, such as multistate employees, owner-employee payroll or worker classification. Confirm any figure in this guide with the agency before you rely on it.