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Healthcare Practices: Payroll Setup Guide (2026)
Setting up healthcare practice payroll means the standard registrations, an EIN, state withholding and unemployment accounts, new hire reporting, plus the healthcare practice specifics: pay codes for shift differentials and on-call pay and a documented classification for physicians and nurses. BEG runs healthcare practice payroll for $45 per employee per month inside the payroll software you already use, all-inclusive, live in 3 to 5 business days.
Step 1: accounts and registrations
Every healthcare practice starts with an EIN, a withholding account in each state where someone works (unless that state has no wage tax), an unemployment insurance account in each of those states, and access to each state's new hire directory. New employers deposit federal employment taxes monthly during the first calendar year because there is no lookback period yet.
Step 2: classify physicians and nurses before the first check
Registered nurses licensed by the state examining board generally meet the learned professional duties test and may be treated as exempt only if paid on a salary basis of at least $684 per week; hourly-paid RNs must receive overtime. Licensed practical nurses generally do not qualify as exempt regardless of experience and are entitled to overtime pay.
Step 3: build the healthcare practice pay codes
Shift differentials, on-call pay, credentialing-based pay tiers and multi-location clinic payroll each become a pay code with its own taxability and overtime treatment. Building them before the first run is cheaper than correcting a quarter of 941s afterward.
Employers report federal income tax withheld plus both the employee and employer shares of Social Security and Medicare tax on Form 941 each quarter. Employers that reported more than $50,000 of employment taxes in the lookback period, or accumulated $100,000 or more in liability on any day, are semiweekly depositors and must attach Schedule B.
Step 4: set the records up to be kept
HIPAA covered entities must train every workforce member on their privacy policies, train each new hire within a reasonable period after joining, document that the training was provided, and retain that documentation for 6 years from creation or the date it was last in effect.
Offices of physicians (NAICS 6211), dentists (6212), other health practitioners (6213), outpatient care centers (6214) and medical labs (6215) are on OSHA's partially exempt list and need not keep OSHA 300 injury and illness logs unless OSHA or BLS asks in writing. Hospitals (6221) and nursing care facilities are not on the list, and every employer must still report a fatality, in-patient hospitalization, amputation or loss of an eye.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Registered nurses licensed by the state examining board generally meet the learned professional duties test and may be treated as exempt only if paid on a salary basis of at least $684 per week; hourly-paid RNs must receive overtime. Licensed practical nurses generally do not qualify as exempt regardless of experience and are entitled to overtime pay. [DOL Fact Sheet #17N]
- Employers report federal income tax withheld plus both the employee and employer shares of Social Security and Medicare tax on Form 941 each quarter. Employers that reported more than $50,000 of employment taxes in the lookback period, or accumulated $100,000 or more in liability on any day, are semiweekly depositors and must attach Schedule B. [IRS About Form 941]
- HIPAA covered entities must train every workforce member on their privacy policies, train each new hire within a reasonable period after joining, document that the training was provided, and retain that documentation for 6 years from creation or the date it was last in effect. [45 CFR 164.530(b) and (j)]
- Offices of physicians (NAICS 6211), dentists (6212), other health practitioners (6213), outpatient care centers (6214) and medical labs (6215) are on OSHA's partially exempt list and need not keep OSHA 300 injury and illness logs unless OSHA or BLS asks in writing. Hospitals (6221) and nursing care facilities are not on the list, and every employer must still report a fatality, in-patient hospitalization, amputation or loss of an eye. [OSHA 29 CFR 1904 Subpart B, Appendix A]
Read the full guide to how to set up payroll for a new business, and the rest of the healthcare practice payroll library.
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Frequently Asked Questions
What registrations does a new healthcare practice need before running payroll?
An EIN, a state withholding account and a state unemployment account in every state with an employee, and new hire reporting access. State registrations are the slow step and can take weeks, so they start before the first hire date.
How are physicians and nurses classified at setup?
Registered nurses licensed by the state examining board generally meet the learned professional duties test and may be treated as exempt only if paid on a salary basis of at least $684 per week; hourly-paid RNs must receive overtime. Licensed practical nurses generally do not qualify as exempt regardless of experience and are entitled to overtime pay.
What records must a healthcare practice keep from day one?
HIPAA covered entities must train every workforce member on their privacy policies, train each new hire within a reasonable period after joining, document that the training was provided, and retain that documentation for 6 years from creation or the date it was last in effect.
What does managed payroll cost for a healthcare practice?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Shift differentials, on-call pay and credentialing-based pay tiers are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Healthcare Practices. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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