How to Do Payroll in Minnesota: A Step-by-Step Guide

Last reviewed: July 2026

Minnesota's payroll rules are fairly plain compared to some states, but the withholding form is where employers stumble most: it's a separate certificate from the federal W-4, and skipping it changes how much comes out of an employee's check. Here's the full sequence, in order.

1. Get Your Federal EIN

Every payroll setup starts with a federal Employer Identification Number. Apply free at IRS.gov and you'll have it within about fifteen minutes. You'll need it for every state registration that follows, plus your business bank account and payroll software.

2. Register with Minnesota Revenue

Register for a withholding account with the Minnesota Department of Revenue. This lets you withhold Minnesota income tax from employee paychecks and deposit it on the schedule Revenue assigns based on your expected withholding volume.

3. Register for SUI with UI Minnesota

Register with Unemployment Insurance Minnesota, run by the Department of Employment and Economic Development. Most new, non-construction employers get a standard rate of 1.0% in 2026, though the exact figure depends on your industry classification; construction rates run considerably higher. The taxable wage base for 2026 is $44,000 per employee.

This tax is fully employer-paid. After a couple of years of history, your rate becomes experience-rated, adjusting based on how many former employees have drawn benefits against your account.

4. Collect Employee Paperwork

Before anyone's first shift, collect three documents:

• Form I-9, verifying work eligibility, with Section 2 completed within three business days of the start date.
• Federal Form W-4, for federal withholding.
• Form W-4MN, the Minnesota Withholding Allowance/Exemption Certificate. Without it, withhold as if the employee is single with zero allowances.

Report the new hire to the Minnesota New Hire Reporting Center within 20 days of the start date. Most payroll software submits this automatically once the hire is entered into the system.

5. Set a Legal Pay Schedule

Minnesota requires wages to be paid at least once every 31 days on a regular payday set in advance, which gives employers real flexibility compared to states with strict weekly or biweekly mandates. Employees in transitory work must be paid at intervals of no more than 15 days, and commissions are due at least once every three months.

Whatever schedule you choose, keep it consistent and posted where employees can see it. A regular, predictable payday is part of what the statute requires, not just good practice.

6. Run Payroll and Make Deposits

Each pay period, calculate gross wages, apply federal withholding from the W-4, apply Minnesota withholding from the W-4MN, and withhold the employee's share of Social Security and Medicare. You owe a matching FICA amount as the employer, along with federal and state unemployment tax.

Federal deposits follow the IRS's semiweekly or monthly schedule and get reported quarterly on Form 941. State withholding deposits follow the schedule Revenue assigned at registration. Our paycheck calculator shows federal and Minnesota withholding together, and the W-4 helper walks new hires through both forms before their first check.

7. Close Out the Year

W-2s are due to employees and the Social Security Administration by January 31. Minnesota also expects an annual withholding reconciliation filed through the Department of Revenue's e-Services system, so the totals on your W-2s match what you deposited across the year. Handling this in January instead of waiting keeps you clear of the late-filing penalties that stack up per form.

Frequently Asked Questions

How do I set up payroll for the first time in Minnesota?

Get a federal EIN from the IRS, register with the Minnesota Department of Revenue for withholding, register with Unemployment Insurance Minnesota for a SUI account, collect I-9, W-4, and W-4MN forms from each employee, then pick a pay schedule and run your first payroll.

What state tax form replaces the W-4 in Minnesota?

Minnesota employees fill out Form W-4MN, the Minnesota Withholding Allowance/Exemption Certificate, alongside the federal W-4. Without one on file, you withhold state tax as if the employee were single with zero allowances.

How often do Minnesota employers have to pay employees?

Minnesota law requires wages to be paid at least once every 31 days on a regular payday. Employees in transitory work must be paid at intervals of no more than 15 days, and commissions are due at least once every three months.

When do new hires need to be reported in Minnesota?

Minnesota employers must report every new hire and rehired employee to the Minnesota New Hire Reporting Center within 20 days of the start date.