Delaware C-Corp Payroll Setup and FUTA Compliance Checklist

Delaware C-Corp Payroll Setup

Once your Delaware C-Corp begins hiring employees, payroll compliance becomes one of the most important legal and tax obligations.
Setting up payroll correctly ensures timely withholding, accurate reporting, and protection against IRS or state penalties.
This guide provides a step-by-step Delaware payroll setup checklist and explains how to comply with FICA, FUTA, and state withholding requirements in 2025.

Step 1: Obtain Federal and State Tax Identifications

Before paying any employees, your Delaware C-Corp must register for:

1. Employer Identification Number (EIN):
   Apply through the IRS Form SS-4 or online at IRS.gov.
   This number identifies your corporation for federal tax and payroll reporting.
2. Delaware Withholding Account Number:
   Register with the Delaware Division of Revenue to withhold state income tax from employee wages.
3. Delaware Unemployment Insurance Account:
   Register with the Delaware Department of Labor (DOL) to report and pay state unemployment insurance (SUTA).

Step 2: Classify Workers Properly

Under IRC §3121(d) and Delaware Code Title 19, it is essential to determine whether workers are employees or independent contractors.

• Employees require payroll withholding and tax filings.
• Independent contractors receive Form 1099-NEC for payments over $600.

Example:
A Delaware AI startup hiring data analysts as employees must withhold payroll taxes.
However, hiring a one-time web designer on contract does not require withholding, only Form 1099 reporting.

Step 3: Set Up Payroll Withholding

Employers must withhold both federal and state income taxes from each employee paycheck.

Federal Withholding Includes:

• FICA Taxes: Social Security (6.2%) and Medicare (1.45%) under IRC §3101.
• FUTA Tax: 6% on the first $7,000 of each employee’s annual wages, reduced to 0.6% after SUTA credit.
• Federal Income Tax: Based on Form W-4.

Delaware State Withholding:

• Progressive rates from 2.2% to 6.6% based on income level.
• Employees submit Form W-4DE to determine state withholding amounts.

Step 4: File Required Payroll Tax Forms

To remain compliant, Delaware C-Corps must file the following payroll forms on time:

Due Dates:

• Federal Form 941: April 30, July 31, October 31, and January 31.
• FUTA Form 940: January 31 each year.
• Delaware SUTA: End of the month following each quarter.

Step 5: Deposit Payroll Taxes on Time

Payroll taxes must be deposited using the Electronic Federal Tax Payment System (EFTPS).

Deposit Schedule:

• Monthly Depositors: Pay by the 15th of the following month.
• Semiweekly Depositors: Pay within three banking days of payday.

Delaware employers must also remit withheld state taxes to the Division of Revenue according to the assigned frequency (monthly, quarterly, or eighth-monthly for large employers).

Step 6: Maintain Required Payroll Records

Both the IRS and Delaware law require employers to maintain payroll records for at least four years.

Include:

• Employee names, addresses, and Social Security numbers.
• W-4 and W-4DE forms.
• Dates and amounts of wage payments.
• Records of tax deposits and filings.

Proper documentation supports your position in case of IRS or Delaware DOL audits.

Step 7: Verify Employee Eligibility and Compliance

Every new employee must complete:

• Form I-9 for work eligibility verification.
• New Hire Reporting through Delaware’s Department of Labor within 20 days of hire.

Employers must also comply with Delaware’s Workers’ Compensation and labor poster requirements.

Step 8: Automate Payroll for Accuracy

Delaware C-Corps can reduce errors and improve compliance by using automated payroll platforms that:

• Integrate with accounting software.
• Automatically calculate tax withholdings.
• Generate tax filings and W-2 forms.

Automation ensures consistent adherence to IRS and state deadlines.

Step 9: End-of-Year Reporting and Reconciliation

At year-end, Delaware employers must:

1. Distribute Form W-2 to all employees by January 31.
2. File Form W-3 with the Social Security Administration.
3. Submit Delaware Form W-3A to the Division of Revenue with copies of all W-2s.
4. Reconcile quarterly filings with annual totals to confirm accuracy.

Conclusion

Setting up payroll correctly is critical for the success of any Delaware C-Corp.
Accurate tax withholding, timely deposits, and proper documentation prevent penalties and build a strong compliance foundation for growth.
By following this 2025 payroll checklist, Delaware businesses can remain fully compliant with both state and federal payroll regulations.

Call to Action

For expert assistance with Delaware payroll setup, tax withholding, and FUTA compliance, contact Anshul Goyal, CPA EA FCA, a U.S.-licensed Certified Public Accountant, Enrolled Agent authorized to practice before the IRS, and cross-border tax expert assisting Delaware corporations with payroll compliance and federal filings.

Disclaimer

This content is for informational purposes only and does not constitute legal or tax advice. Always consult a CPA before submitting payroll filings or setting up tax withholdings.

Top 5 FAQs

1. What payroll taxes apply to Delaware C-Corps?
   FICA, FUTA, and Delaware state withholding taxes.
2. When are Delaware payroll taxes due?
   Federal Form 941 is due quarterly, and state filings are usually monthly or quarterly.
3. What is the Delaware withholding rate?
   Rates range from 2.2% to 6.6% depending on employee income.
4. Is FUTA tax deductible for corporations?
   Yes. FUTA payments are deductible business expenses.
5. How can I automate payroll compliance?
   Use integrated payroll software that handles federal and Delaware filings automatically.

About Our CPA

Anshul Goyal, CPA EA FCA is a Certified Public Accountant licensed in the United States, Enrolled Agent authorized to practice before the IRS, and cross-border tax expert helping Delaware startups and corporations with payroll setup, compliance, and tax filings.