How to Do Payroll in Virginia: Step-by-Step Guide

Last reviewed: July 2026

Setting up payroll in Virginia takes a handful of registrations and one state tax form, then settles into a repeating cycle of paying people, depositing withholding, and filing on schedule. Here is the order that actually works, from your first employee to your first W-2 season.

1. Get Your Federal EIN

Before anything else, apply for an Employer Identification Number from the IRS. It is free, takes about fifteen minutes online, and you receive the number immediately. Every state registration in the next step depends on having it, so do not skip ahead.

Apply at IRS.gov/EIN. If you already have an EIN from a prior business, you still need a new one for a new legal entity.

2. Register With Virginia's Two State Agencies

Virginia splits employer registration across two separate agencies, and both need your attention before your first payroll run.

Register with the Virginia Department of Taxation to open a withholding tax account. This account is what lets you legally withhold state income tax from paychecks and remit it to Richmond. Then register separately with the Virginia Employment Commission (VEC) for a State Unemployment Insurance (SUI) account. These are two different agencies with two different account numbers, and one registration does not cover the other.

From the Payroll Desk

Start both registrations the same week you decide to hire, not the week your new employee starts. Processing can take several business days, and you are required to have your account numbers in place before you deposit any tax.

3. Collect Form VA-4 for Withholding

Every Virginia employee should complete Form VA-4, the Employee's Virginia Income Tax Withholding Exemption Certificate, when they start. It tells you how many exemptions to apply when calculating state withholding. If an employee never turns one in, Virginia requires you to withhold as though they claimed zero exemptions, which usually means over-withholding until they file the form.

Virginia's income tax uses four graduated brackets from 2% to 5.75%, and the top bracket begins at just $17,001 of taxable income. Practically, that means most full-time employees land in the top bracket for withholding purposes almost immediately.

4. Understand Your SUI Obligation

SUI is an employer-only tax, meaning you do not deduct it from employee paychecks. New Virginia employers pay a 2.5% SUI rate on the first $8,000 of each employee's wages per year, plus a small administrative assessment. After you build a claims history, the VEC reassigns you an experience-based rate that can run lower or higher depending on how much unemployment your former employees have drawn.

You will file quarterly wage reports through the VEC once your account is set up. Missing a quarter does not make the liability disappear; it just adds penalties and interest to what you already owed.

5. Pay Frequency and Final Pay

Virginia law sets minimum pay frequency by how an employee is classified. Hourly employees must be paid at least twice a month or every two weeks. Salaried employees can be paid monthly, though many employers choose biweekly or semi-monthly for everyone to keep payroll simple.

When an employee leaves, whether they quit or you let them go, Virginia law requires you to pay all wages earned through their last day on or before the date they would have normally been paid. You are not required to pay out unused vacation or PTO unless your own written policy promises it. This rule comes from Code of Virginia 40.1-29, and it applies the same way to every employer in the state.

6. Deposit and Filing Calendar

Once payroll is running, your recurring obligations look like this:

For the federal side of deposits, our Form 941 guide walks through IRS deposit schedules and how they interact with your state calendar.

7. Year-End W-2 Filing

By January 31 each year, you must give every employee a W-2 and file copies with the Social Security Administration. The Virginia wages and withholding on each W-2 need to match what you reported across the year's deposits, so a quick reconciliation before you file catches most transposition errors before they become amended returns.

Running these numbers by hand every pay period gets old fast, and small mistakes in withholding or deposit timing carry real penalties. A tool like our paycheck calculator or our W-4 helper can save time on the employee side, and payroll software can handle the deposit and filing side automatically.

Frequently Asked Questions

How do I register as a new employer to run payroll in Virginia?

You need a federal EIN from the IRS, a withholding tax account with the Virginia Department of Taxation, and an SUI account with the Virginia Employment Commission. Complete all three before your first payday.

What form do Virginia employees use for state income tax withholding?

Virginia employees complete Form VA-4, the Employee's Virginia Income Tax Withholding Exemption Certificate. If an employee does not submit one, you must withhold as if they claimed zero exemptions.

What is Virginia's SUI rate and wage base for new employers?

New Virginia employers pay an SUI rate of 2.5% on the first $8,000 of each employee's wages, plus a small administrative assessment. The Virginia Employment Commission reassigns your rate after you build a claims history.

How often must Virginia employers pay their employees?

Hourly employees must be paid at least twice a month or every two weeks. Salaried employees can be paid monthly. These rules come from Code of Virginia 40.1-29.

When are Virginia payroll taxes due?

Virginia withholding tax is deposited monthly or quarterly based on your assigned liability tier, and SUI wage reports are due quarterly to the Virginia Employment Commission. Federal deposits follow the IRS schedule for Form 941.