Last reviewed: July 2026
New Kentucky employers need four things before their first payroll: a federal EIN, a withholding account with the Kentucky Department of Revenue, an unemployment insurance account with KEWES (the Kentucky Office of Unemployment Insurance), and workers' compensation coverage, which Kentucky requires for nearly every employer.
Table of Contents
Hiring your first employee in Kentucky triggers registration requirements at both the federal and state level. Missing one can mean penalties or a delayed first payroll. Here's the order to work through them.
Registration Overview
Every new Kentucky employer needs:
- ☑ Federal Employer Identification Number (EIN)
- ☑ Kentucky withholding tax account (Department of Revenue)
- ☑ Kentucky SUI account (KEWES / Office of Unemployment Insurance)
- ☑ Workers' compensation insurance
- ☑ New hire reporting setup
- ☑ Payroll system or software
Step 1: Get Your Federal EIN
Your Employer Identification Number (EIN) is your federal tax ID, and you'll need it for every state registration that follows — plus opening a business bank account and running payroll itself.
Apply online at IRS.gov/EIN. It's free and you receive your EIN immediately.
Step 2: Register with the Kentucky Department of Revenue
Register for a withholding tax account through the Kentucky Department of Revenue. This lets you withhold Kentucky's flat 3.5% income tax rate (2026) from paychecks and remit it electronically on the schedule DOR assigns you.
From the Payroll Desk
Register as soon as you know you'll be hiring, not the week of your first payroll. Give the registration a few business days to process before you need to file or deposit anything.
Step 3: Register for SUI
Register for a State Unemployment Insurance account through KEWES, the Kentucky Office of Unemployment Insurance. You'll be assigned:
- An employer account number
- Your initial SUI rate: 2.7% for standard new employers
- Quarterly filing requirements
SUI is an employer-paid tax on the first $12,000 of each employee's wages. See our Kentucky SUI Rates 2026 guide for the full rate table.
Step 4: Workers’ Compensation Insurance
Kentucky requires workers' compensation insurance for nearly every employer with one or more employees (KRS 342.340), with only narrow exemptions for certain agricultural and domestic work. Operating without coverage when it's required is a Class D felony under Kentucky law — this isn't an optional add-on.
Coverage is available through private insurance carriers. Compare quotes across a couple of carriers since rates vary by industry classification and claims history.
Step 5: New Hire Reporting
Federal and Kentucky law require you to report every new hire within 20 days of their start date (7 days is recommended). This information helps enforce child support orders.
Report through the Kentucky New Hire Reporting Center. See our New Hire Reporting guide for the required fields.
Step 6: Set Up Payroll
With registrations complete, you're ready to run payroll. Kentucky's flat tax rate simplifies the state withholding math, but you still need to track federal deposits, DOR deposits, and KEWES quarterly filings on three separate calendars. Check your numbers against our paycheck calculator before your first live run, and point new hires to our W-4 Helper for the federal form.
For the full walkthrough, see How to Do Payroll in Kentucky.
Frequently Asked Questions
Where do Kentucky employers register for unemployment insurance?
Kentucky employers register for UI (unemployment insurance) with the Kentucky Office of Unemployment Insurance (KEWES), part of the Education and Labor Cabinet. Registration is completed online through the agency's employer portal before running your first payroll.
Where do Kentucky employers register for state income tax withholding?
Kentucky employers register for state income tax withholding with the Kentucky Department of Revenue. You will receive a state employer withholding account number used on all tax filings and deposits.
Do I need to register before running my first payroll in Kentucky?
Yes. You must have your Kentucky employer account number(s) before filing or depositing state payroll taxes. Register with the Kentucky Office of Unemployment Insurance and the Kentucky Department of Revenue as soon as you know you'll be hiring.
What is the Kentucky new employer SUI rate for 2026?
New Kentucky employers start at a standard unemployment insurance rate of 2.7% on the first $12,000 of each employee's wages, per the Kentucky Office of Unemployment Insurance.
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Legal & Tax Disclaimer
This article is for general informational purposes only and does not constitute legal, tax, or professional advice. Employment laws, tax regulations, and compliance requirements change frequently. The information on this page reflects our understanding as of July 2026 and may not reflect recent changes in federal or Kentucky state law.
Do not act or refrain from acting based solely on the information in this article. Always consult a qualified attorney, CPA, or HR professional familiar with Kentucky law before making payroll or compliance decisions for your business.