Virginia has a progressive state income tax but no local taxes, and the HR laws generally follow federal guidelines. However, you still need to pay close attention to your payroll process to ensure you make no mistakes.
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QuickBooks Payroll is great for processing payments for all types of employees due to its versatility, ease of use, and wide variety of features. |
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Step-by-Step Guide to Running Payroll in Virginia
Virginia has few state-specific HR laws and generally follows federal guidelines. With a progressive income tax and business taxes, running payroll by hand could present complexities and potential mistakes. Here is a basic guide to running payroll in Virginia (we’ve also included a checklist you can follow).
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Step 1: Set up your business as an employer. New companies may need to access the Electronic Federal Tax Payment System (EFTPS) to create a new Federal Employer Identification Number (FEIN). Your FEIN is required to pay federal taxes.
Step 2: Register your business with the State of Virginia. If your business is new, you need to register on the Virginia Secretary of State’s website. Any company that pays employees in Virginia must also register with the Virginia Department of Revenue.
Step 3: Create your payroll process. You’ll need to decide on a regular pay schedule, how you’ll track employee time if paying hourly workers, when you’ll start processing payroll to ensure payments deposit into employee bank accounts on payday, etc. Starting a new business may mean you need to create a payroll process from scratch. If the business has been processing payroll for a while, some of these key decisions should already be in place.
Step 4: Have employees fill out relevant forms. Your business must have every employee complete payroll forms during their onboarding process. Every employee must complete I-9 verification. New employees must also have a completed W-4 on file, along with Virginia’s Form VA-4.
Step 5: Review and approve time sheets. One of the most crucial pieces of your payroll process includes collecting and reviewing time sheets before your payroll due date. Reviewing the time sheets from your nonexempt employees before the day your payroll is due gives you time to speak with anyone who might have made mistakes.
Step 6: Calculate employee payroll and taxes. With a progressive income tax and employment taxes, including unemployment, tax calculations can be complex. You’ll need to calculate total hours worked (use our free timecard calculator), gross pay, deductions, etc. You can also use payroll software or Excel to calculate payroll.
Step 7: Pay employee wages, benefits, and taxes. The best way to pay your employees is through direct deposit. But cash and paper checks are also options. Virginia has a minimum wage of $12.00 per hour, higher than the federal minimum wage of $7.25 per hour. You can pay your federal and Virginia business taxes online. If you use a benefits provider, it should work with you to make deductions simple, automatic, and electronic.
Step 8: Save your payroll records. Keeping your company business records is good practice. Virginia requires businesses to keep record of all hours worked and wages paid to each employee, including their name, address, and date of birth. Virginia does not note how long these records must be kept, so following the Fair Labor Standards Act (FLSA), it’s good practice to keep these payroll records for at least three years and payroll tax records for four years.
Step 9: File payroll taxes with the federal and state government. All Virginia state taxes need to be paid to the applicable state agency on the schedule provided, usually quarterly, which you can do online at the Virginia Tax Department’s website. To pay federal taxes, you can make those payments online using the EFTPS on one of the following two schedules:
- Monthly: When the IRS assigns you a monthly schedule, you need to deposit employment taxes on payments made during a calendar month by the 15th of the following month.
- Semiweekly: When the IRS assigns you a semiweekly schedule, you must deposit employment taxes for payments made Wednesday, Thursday, and Friday by the following Wednesday, and for payments made Saturday, Sunday, Monday, and Tuesday, by the following Friday.
Please note that reporting schedules and depositing employment taxes are different. Regardless of the payment schedule you are on, you only report taxes quarterly on Form 941 or annually on Form 944.
Step 10: Complete year-end payroll reports. Doing payroll in Virginia requires more than just paying employees on a regular schedule. Every year, you will need to complete payroll reports, including all W-2 Forms and 1099 Forms. You must provide these forms to employees no later than Jan. 31 of the following year.
Learn more about doing payroll yourself in our guide on how to do payroll. It has a free checklist you can download to make sure you don’t miss any steps.
Virginia Payroll Laws, Taxes & Regulations
Doing payroll in Virginia will require that you calculate Virginia payroll taxes and ensure compliance with all federal and state employment laws. To help you maintain compliance with payroll regulations, review Virginia’s relevant regulations below.
With few exceptions, most employers in the US must pay Federal Insurance Contributions Act (FICA) taxes. The current FICA tax rate for Social Security is 6.2% and 1.45% for Medicare. Both the employer and the employee will pay these taxes, each paying 7.65% for the combined Social Security and Medicare taxes.
Use our free calculators below to help you out:
Virginia Taxes
Like most states, Virginia has certain taxes that companies must pay. There’s also a progressive income tax that you will need to calculate and withhold from every employee’s paycheck. Virginia does not levy local taxes on employees.
Income Taxes
Virginia has a progressive income tax that you will need to calculate and withhold from every paycheck. Here are the four tax brackets that apply to all Virginia employees, regardless of filing status:
Tax Rate | Taxable Income |
|---|---|
2% | $0 to $3,000 |
3% | $3,001 to $5,000 |
5% | $5,001 to $17,000 |
5.75% | $17,001 and up |
You can use Virginia’s withholding tables to determine how much you need to withhold from each paycheck.
Employer Unemployment Taxes
All businesses in Virginia must pay State Unemployment Tax Act (SUTA) taxes. The current wage base is $8,000 and base rates range from 0.33% to 6.43%. New Virginia businesses will pay a rate of 2.73%. Keep in mind this doesn’t include contributions to the pool fund or any other surcharges. Businesses that pay SUTA in full and on time can claim a tax credit of up to 5.4% on their Federal Unemployment Tax Act (FUTA) taxes.
To learn more about FUTA requirements, check out our guide on FUTA and Form 940.
Workers’ Compensation
Virginia requires every employer with two or more full- or part-time employees to carry workers’ compensation insurance. Workers’ compensation insurance provides benefits to employees who suffer on-the-job injuries and covers the cost of medical treatment and lost wages. Workers’ compensation payments start on the fourth day of disability. The average cost is 74 cents per $100 of payroll.
Virginia Minimum Wage
Virginia has a minimum wage of $12.00 per hour, higher than the federal minimum wage. For tipped employees, companies must pay at least $2.13 per hour, provided that their tips get them to the hourly minimum wage. If not, the company must make up the difference.
Please note, Virginia has a minimum wage increase schedule, which annually increases the minimum wage, Jan. 1 of each year, eventually reaching $15.00 per hour by Jan. 1, 2026. Note that 2023 and 2024 have the same minimum wage, so there is no increase for that 24-month period. Also note that the Virginia minimum wage law states that if the federal minimum wage is increased to a rate higher than what is noted below, the federal minimum wage will apply.
Year | Minimum Wage |
|---|---|
2021 | $9.50 |
2022 | $11.00 |
2023 - 2024 | $12.00 |
2025 | $13.50 |
2026 | $15.00 |
Calculating Overtime
While Virginia overtime rules generally follow the Fair Labor Standards Act requirements, beginning July 1, 2021, the Virginia Overtime Wage Act took effect, creating a different overtime calculation for nonexempt salaried employees.
The 2022 Virginia General Assembly amended this act, essentially replacing it with language mirroring the FLSA. Be aware that the amendment is not retroactive, so businesses could still face claims for overtime violations during the short period when the act was different from the FLSA. Under the FLSA, all employers must pay employees 1.5 times their regular hourly wage for hours worked over 40 in a workweek.
Use our free overtime calculator below to help:
Paying Employees
Virginia law requires hourly employees to be paid at least once every two weeks or twice per month. Salaried employees must be paid at least once per month. No matter what pay schedule you choose, make sure you remain consistent and do not arbitrarily change your pay schedule.
Virginia also allows employers to pay workers by one of the following methods:
- Cash
- Paper check
- Direct deposit, only if authorized by the employee in writing
- Payroll card
If you need help keeping track of your payroll periods, use one of our free pay period calendars.
Pay Stub Laws
Under Virginia law, you must give each employee a pay stub with every paycheck, except employees in the agricultural industry. The pay stub must be paper and show the following information:
- Name and address of employer
- Name of employee
- The number of hours worked during the pay period
- Rate of pay
- Gross wages earned
- Itemized deductions
If you do not use a payroll service, download one of our free pay stub templates to help you get started.
Virginia Paycheck Deductions
You’re not allowed to deduct money from an employee’s paycheck for the following reasons:
- Cash shortages
- Damage to company property
- Required uniforms or tools
- Rent
Virginia employers may only deduct wages from an employee’s pay if required or authorized by law, or if the employee consents in writing.
Terminated Employees’ Final Paychecks
Virginia employers are required to pay employees who quit or resign or are discharged, fired, or laid off no later than the next regular payday. State regulations do not address employees who are suspended or resign due to a labor dispute, so it’s best to assume that you need to pay those employees no later than the next regular payday or sooner.
If you need to pay an employee right away and aren’t currently using a service, use one of our recommended ways to print a free payroll check.
Virginia HR Laws That Affect Payroll
Virginia mostly follows federal guidelines, so if you are familiar with those, you should have no issues understanding the additional Virginia HR laws. However, it does have a few state-specific HR laws that you need to know.
Virginia New Hire Reporting
Every employer in Virginia must report new hires and any rehired employees to the Virginia New Hire Reporting Center within 20 days of the date they’re hired. This information is used to enforce child support orders and must include the employee’s name, address, and Social Security number.
Meals & Breaks
You must provide lunch breaks of at least 30 minutes to workers aged 14 and 15 if the employee is scheduled to work over five consecutive hours. Virginia has no break laws for employees 16 and older. If your company does provide meal and break periods to those workers, breaks of less than 20 minutes must be paid, but breaks or meal periods over 30 minutes generally do not need to be paid.
Virginia Child Labor Laws
Workers aged 16 or older do not have restrictions placed on them. However, under Virginia law, workers aged 14 and 15 must obtain an employment certificate to work. During the school year, minors can only work between the hours of 7 a.m. and 7 p.m., not during school hours, no more than three hours per school day, and no more than 18 hours per week. During non-school weeks, minors may work up to eight hours per day and up to 40 hours per week.
Check out our guide to hiring minors for more insight into federal child labor laws.
Time Off & Leave Requirements
For many companies, time off is a key component of their employee benefits package. But some time off and leave benefits are required under state or federal law. Here’s a breakdown.
Payroll Forms
Below are some state and federal forms needed to produce accurate pay for employees and compliant payroll reporting and tax remittance for businesses.
Virginia Payroll Forms
- Form VA-4: Virginia’s Employee Withholding Exemption Certificate
Federal Payroll Forms
Here is a complete list and location of all the federal payroll forms you should need.
- W-4 Form: Provides information on employee withholdings so you can properly calculate and withhold federal and state income taxes
- W-2 Form: Used to report total annual wages for each employee
- W-3 Form: Used to report total annual wages for all employees; summary form of W2
- Form 940: To calculate and report unemployment taxes due to the IRS
- Form 941: Used to file quarterly income tax
- Form 944: Used to file annual income tax
- 1099 Forms: Provides information for non-employee contract work
For a more detailed discussion of federal forms, check out our guide on the federal payroll forms you may need.
Virginia Payroll Tax Resources
- Virginia Department of Revenue provides many forms, information on the latest laws and regulations, and other employer-specific information.
- Virginia New Business Resources offers comprehensive information related to your business, keeping up to date on certifications, and paying taxes.
- Virginia Department of Labor and Industry offers support and resources to help businesses ensure compliance with unemployment and workers’ compensation, plus other labor laws.
Bottom Line
Virginia has a few state-specific HR laws, progressive income tax, and a higher minimum wage than the federal government requires. While most of Virginia payroll regulations follow federal guidelines, understanding the differences will be crucial to making sure you calculate payroll and payroll taxes correctly.
