We are hiring our first HOA employee. How does the treasurer set up payroll?

By OurHOA · General information · Revised November 3, 2026

How an HOA treasurer sets up payroll for a first employee: W-4 and I-9, new hire report, state unemployment account, FAMLI in Colorado, deposits and W-2s.

Part of the HOA board handbook: treasurer and money.

The short answer

Payroll for one part-time groundskeeper takes the same accounts as payroll for fifty people. Before the first paycheck, the treasurer needs a signed Form W-4 and a completed Form I-9, a plan for federal tax deposits, a new hire report to the state, and a state unemployment account once the association crosses the state threshold, which a regular employee does within a quarter or two. Colorado adds a state income tax withholding account and FAMLI premiums. After that the work runs on a fixed cycle: withhold every payday, deposit by the 15th of the next month, file quarterly returns, and issue a W-2 each winter. The board decides whether to hire at all. Our guide on whether an HOA can have employees covers classification and the federal unemployment tax, and our guide on whether an HOA needs workers' compensation insurance covers that coverage. This guide starts once the motion has passed. Rules vary by state and by your governing documents, so treat it as education, not legal or tax advice, and have your CPA check the setup before the first payroll.

Federal setup before the first payday

The association already has an EIN if it files Form 1120-H, and payroll uses the same number. Collect three things from the new hire on or before the first day: a Form W-4, which sets federal income tax withholding; a Form I-9, which verifies that the person may work in the United States; and the employee's name and Social Security number exactly as they appear on the card, which Publication 15 tells employers to record. IRS Publication 15 governs the rest. A new employer is a monthly schedule depositor for its first calendar year, which means the federal income tax withheld plus both halves of Social Security and Medicare for a month are due by the 15th of the following month. If the whole quarter's liability on Form 941 stays under $2,500, the association may instead pay it with the return. Deposits go electronically, and an employer that showed a federal tax obligation when it got its EIN is pre-enrolled in the Treasury's EFTPS system. An association that only now starts payroll should enroll before the first deposit is due. Form 941 is due April 30, July 31, October 31 and January 31. Form 944, the annual version, is only for employers whose yearly employment taxes run $1,000 or less, and only after the IRS sends written notice approving it.

State accounts in Texas, Florida and Colorado

Texas. Under Labor Code section 201.021, the association becomes a liable employer once it pays $1,500 in wages in a calendar quarter or employs someone on part of a day in 20 different weeks of the year. The Texas Workforce Commission requires registration within 10 days of becoming liable, through its free Unemployment Tax Registration site. Texas has no state income tax to withhold. Report the hire to the Attorney General's new hire directory within 20 calendar days of the date the employee starts earning wages. Labor Code section 61.011 requires paying an hourly employee at least twice a month, and section 62.051 sets the state minimum at the federal minimum wage. Florida. Section 443.1215 uses the same $1,500 or 20-week test for reemployment tax. Register with the Department of Revenue on the Florida Business Tax Application (Form DR-1). New employers start at a 2.7 percent rate on the first $7,000 of each employee's wages, the tax is the employer's alone, and the Department says employers must not deduct it from pay. Section 409.2576 requires the new hire report within 20 days. Article X, section 24 of the Florida Constitution brought the minimum wage to $15.00 on September 30, 2026, with inflation adjustments after that. Colorado. C.R.S. 8-70-113 makes the association an unemployment insurance employer once it pays $1,500 in a quarter or has an employee on 20 days in different weeks. Colorado also taxes wages, so open a withholding account with the Department of Revenue and ask the employee for the state certificate, Form DR 0004. Pay periods cannot run longer than a month, and payday must fall within 10 days after the period closes (C.R.S. 8-4-103). The state minimum wage is $15.16 in 2026 and rises to $15.71 on January 1, 2027, and Denver sets its own higher rate, $19.84 for 2027.

Colorado FAMLI and paid sick leave

Colorado's paid family and medical leave program applies from the first employee. The FAMLI Division says any business with at least one qualified employee must register in My FAMLI+ Employer, file wage reports and send premiums each quarter. The premium is 0.88 percent of wages for 2026 under C.R.S. 8-13.3-507(3)(b). For later years the division director sets the rate by rule on or before September 1 of the year before, capped at 1.2 percent, so check the FAMLI site for the 2027 rate before the first January payroll. Subsection (5) matters for an HOA: an employer with fewer than 10 employees may deduct up to half the premium from the employee's wages and remits only that half. On a $1,500 monthly payroll in 2026, the full premium is $13.20; the association with one worker withholds and remits $6.60 and owes no employer share. The division also says employers cannot go back and collect missed premiums from employees in later pay periods, so set the deduction up before the first check. Colorado paid sick leave under C.R.S. 8-13.3-403 also applies to every employer: at least one hour of paid sick leave for every 30 hours worked, up to 48 hours a year unless the employer allows more. Track it on each pay stub from day one.

Decide who runs payroll

For one or two employees, a payroll service is usually the right call. It calculates withholding, makes the federal and state deposits, files Form 941 and the state wage reports, and prepares W-2s. The fee is small next to one late deposit penalty. The association stays liable for the taxes either way, so the treasurer still reviews each quarter's filings against the bank account. If the treasurer runs payroll by hand, pay by check or direct deposit from the operating account, keep a register of gross pay, each withholding, net pay and deposit date, and reconcile it to Form 941 every quarter. Withheld taxes belong to the government from the moment they leave the paycheck. Publication 15 describes the trust fund recovery penalty: 100 percent of unpaid withheld taxes, which the IRS can assess against the people responsible for paying them over when the employer cannot pay. A board that runs short of cash pays the deposit before the landscaper. Sample motion: "Moved that the association employ a part-time grounds attendant at $17.00 per hour for up to 15 hours per week beginning March 2, 2027, paid on the 15th and last day of each month; that the treasurer engage a payroll service to calculate, deposit and file all federal and state payroll taxes; and that the board president serve as the employee's sole supervisor."

A sample first-year payroll calendar

This calendar assumes a Texas or Colorado association (outside Denver) that hires on March 2, 2027 and pays twice a month. - February: board motion at an open meeting, job description, offer letter, payroll service chosen, workers' compensation decision made with the agent. - March 2 (first day): W-4 and I-9 signed. In Colorado, DR 0004 and FAMLI deduction set up. - By March 22: new hire report filed with the state directory, 20 days after the start date. - March 15 and 31: first paydays. Withhold federal income tax, Social Security and Medicare (and Colorado income tax and FAMLI). - April 15: first federal deposit for March wages. Then the 15th of every month. - Second quarter: wages pass $1,500 in a quarter. Texas registration due within 10 days; Colorado and Florida accounts opened the same week. - April 30, July 31, October 31: Form 941 for each quarter. State unemployment wage reports and Colorado FAMLI reports follow the same quarterly rhythm. - December: check next year's minimum wage and FAMLI rate, and budget the payroll line with the employer taxes included. - January 31, 2028: fourth-quarter Form 941, Form 940 for federal unemployment tax, and W-2s to the employee and the Social Security Administration. When January 31 falls on a weekend, the date moves: 2026 Forms W-2 are due February 1, 2027.

Mistakes boards make with a first hire

Paying a neighbor in cash. It skips withholding, the new hire report and the quarterly returns, and an injury or an unemployment claim exposes all of it at once. Waiting for the state to send a letter. The registration clocks run from when the association becomes liable, not from when someone notices. Texas allows 10 days. Missing a minimum wage change. Colorado's rate changes every January 1 and Florida's on September 30. A rate set in the original motion can fall below the floor without anyone touching it. Deducting the wrong things. Florida reemployment tax comes out of the association's pocket, not the paycheck. In Colorado, a FAMLI deduction that was skipped cannot be made up from later checks. Filing the personnel file with the association records. The W-4, I-9 and pay records contain Social Security numbers and pay details that owners cannot inspect under the records statutes in Texas, Florida and Colorado. Keep them in a locked or access-limited folder that the treasurer and the supervisor can open.

Sources

These guides are general education for HOA boards and residents, not legal, tax, or financial advice. Rules vary by state and by your community's governing documents - check with a professional for your situation.

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