Young Upstarts

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Outsourcing Technology Alleviates Payroll Burden For Startups

by Andy Roe, General Manager of SurePayroll, Inc.

accounting spreadsheet

Startups are often focused on innovations and new technology, trying to find a niche in the market that hasn’t been filled or delivering a product/service unlike anything else. That’s why the formation of companies like Uber and Airbnb (and the unicorn startups of the future) is exciting for both consumers and the founders of the company.

And today, entrepreneurship is taking off, as the number of Americans starting new businesses hits record numbers.

But before you can change the world, you have to make sure you get a few of the basics right. There are few things more integral to your credibility as a company than your ability to pay people in a timely and accurate fashion, and then make the proper deductions and tax payments.

So how do you get payroll started in the beginning?

Payroll Requirements

There are several essentials to consider before you can run a payroll and pay your employees:

  1. EIN Number – The employer identification number, which you can request from the IRS, is the first thing you need.
  2. Understanding state and local laws – Not every place is the same when it comes to starting and running a business. In fact, some states have drastically different laws than others. Make sure you learn about the payroll rules in your state before getting started.
  3. The W-4 – This form is necessary for both full and part-time employees, so that you know how much to withhold in taxes.
  4. Pay period – How often do you want to pay people? Monthly, bi-weekly? There are advantages and disadvantages of each frequency.

Payroll Services

The easiest way to handle payroll is probably to outsource it to a service that does the heavy lifting for you. There are many providers out there, and first and foremost, you have to make sure they are reliable. They are, after all, handling your money.

You’ll want to choose a service that has experience in the industry and can handle the various complications that may arise paying different types of employees in different parts of the country.

Here are three basic questions you should ask about a payroll provider:

  1. Can they do payroll taxes for you? This is easily the most time consuming and potentially troubling aspect of the payroll process. You not only want to get it right, but you want to have it done by clicking a button, not downloading spreadsheets and looking up tax codes.
  2. Can they answer specific questions about payroll in your state? Again, state laws can vary significantly, so before you sign up, ask the provider if they can handle payroll where you’re doing business. You would be surprised how many providers cannot.
  3. Do they offer more than technology? Yes, you want a payroll solution that’s online and easy to use, but does the company have a service component behind it? Everyone is online these days. The question is will your business be supported when something out of the ordinary comes up. You want your payroll provider to be a partner you can rely on, not simply a software program.

Alleviating the Burden

Payroll may sound like a boring subject, but it has far reaching implications. Overtime rules, how you classify employees (independent contractors vs. part-time employees), how you classify your business (LLC, S Corp.?).

It’s sort of the central hub that encompasses hiring, taxes, legal requirements, 401(k), health insurance and a whole host of other connected issues.

While it may seem like a burden, the good news is that technology outsourcing or software as a service (SaaS) has made it very manageable. You can outsource payroll just the way you would your email marketing or IT.

For a nominal monthly subscription cost, you’re freeing yourself up to figure out the next avenue of growth for your startup.

 

Andy Roe

Andy Roe is the General Manager of SurePayroll, Inc., a Paychex Company. SurePayroll is the trusted provider of easy online payroll services to small businesses nationwide. SurePayroll compiles data from small businesses nationwide through its Small Business Scorecard optimism survey, and exclusively reflects the trends affecting the nation’s “micro businesses” — those with1-10 employees. You can follow Andy on Twitter @AndrewSRoe.

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Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.

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