No, you don’t need a payroll service to hire your first employee. However, using a payroll service—even to run payroll for just one employee—can dramatically simplify your work life. For instance, some payroll software automatically reports every new hire to the state and can sync with time-tracking software to calculate paychecks, reducing your risk of errors. A full-service payroll solution can also calculate and withhold payroll taxes, remit those taxes to the right agency, and pay employees automatically via direct deposit.