Ask HN: Payroll for bootstrapped startups?

https://news.ycombinator.com/item?id=735187

by stanleydrew • 17 years ago

23 35 17 years ago

news.ycombinator.com

For those of you bootstrapping a startup or who have in the past, how do you handle payroll once money starts trickling in? Assume you're set up as an S-corp or LLC with a couple of shareholders/members but you don't necessarily want to distribute profits in proportion to ownership. Is there a good payroll company for software-startups or should I go down to my bank and see what they have to offer?

mattculbreth2• 17 years ago

We use Bank of America--really easy. They handle everything for us except for the initial setup with the Federal and State governments--you still have to get your IDs and what not.

NOTE: make sure you get some accounting guidance here. It matters how you do this if you want to minimize taxes.

stanleydrew8• 17 years ago

How much does BofA charge for this service?

And on accounting guidance do you mean get advice on distributions vs wages?

mattculbreth2• 17 years ago

We're paying $20/month for two employees. I think it's free if you don't get the State service but that doesn't seem sensible.

Yeah I'd check with an accountant on the wage / distribution / benefits stuff. For small businesses though you really can just pay it all out, just make sure you're paying the taxes.

kriyative2• 17 years ago

Second that. It's really easy once all the electronic filing paperwork has been filed with the IRS and State. Also, their system is the same as Paycycle, just rebranded (I think).

lrm242• 17 years ago

We use Quickbooks. It's painless. Except for the Intuit part. But what are you gonna do? It's nice to have one tool for all accounting and payroll.

stanleydrew8• 17 years ago

For bookkeeping I've just set up my own spreadsheet system. It's nothing complicated, just a standard double entry set of accounts that I manually update since we don't do that many transactions. Then I just pass those to an accountant at the end of the year to prepare the federal return.

aditya• 17 years ago

We're using PayChex and paying about $50/paycheck. But they take care of all tax withholding, etc.

We are also looking at ambrose (http://www.ambrosegroup.com/services/payroll_admin.html) to do both payroll and benefits administration for us soon.

nostrademons• 17 years ago

One of my previous employers used PayChex. Seemed to work fine from an employee perspective...I never had a problem getting paid, at least.

dryicerx• 17 years ago

I'd like to know people calculated how much each person should get from payroll month to month after money does start coming in. Or was it just all Bonuses from time to time?

pumper• 17 years ago

We use ADP. Its expensive - $125 per cycle. Another option is paycycle, but i havent used them

bsaunder2• 17 years ago

Per employee? for all?

mcculley3• 17 years ago

We use PayCycle. It is $42.99 + (numEmployees - 5) * 1.50 per month no matter how many checks you generate. This means you aren't penalized for paying weekly or for generating reimbursement checks out of phase with your normal payroll cycle. I really like it. It generates export files which I import easily into QuickBooks.

I'm very happy with it, I just wish it had an API so I could plug my timesheet system directly into it. Presently I have to transcribe from a web report into their interface but as we only have 16 employees total, it is not a big burden.

We evaluated ADP and they were much more expensive for our use case.

stanleydrew8• 17 years ago

So with two employees i pay $38.50/mo? Or did you mean max( (numEmployees-5), 0 ) * $1.50

bsaunder2• 17 years ago

Is their system browser based as well? If so, seems like a clever Greasemonkey could greatly help with that automation (might need an temporary cache there somewhere).

Scrape your web report, stuff the data somewhere (locally), then on their site, read your cached data and populate their forms.

j2d22• 17 years ago

I'm not sure if this will do what you're looking for, but I really like Harvest.

www.harvestapp.com.

stanleydrew8• 17 years ago

Harvest looks really good and I think I could really use it for invoicing and time-tracking for some consulting contracts we are doing. I'm not sure it does payroll though. Can you use it for payroll?

j2d22• 17 years ago

I don't think so. Sorry! They're VERY good with correspondence though.

sachinag• 17 years ago

PaySimple is a pretty good solution. Remember, in most states, you have to have payroll to qualify for group insurance (which is generally cheaper - and almost always safer from recission - than purchasing individual insurance).

spencerfry2• 17 years ago

You don't need payroll until you've actually got employees. You can just distribute the amount earned based on equity ownership across the members in the LLC. This is termed "disbursements".

stanleydrew8• 17 years ago

Yeah but that's not great if you have non-working members and useless if you want to pay based on hours.

spencerfry2• 17 years ago

As stated, it's only for members being paid on equity distributions.

ilener• 17 years ago

We are a startup in Palo Alto and have developed accounting and payroll integrated into one web-based product called Exponent. It's much more functional than QuickBooks AND less expensive.

Here's the online demo login:

https://www.thinkexponent.com/ e-mail: demo@demo.com password: demo

Payroll is located in the Accounting tab.

stanleydrew8• 17 years ago

Hmm, pricing page seems to want data that it can't find:

Warning: mysql_fetch_array(): supplied argument is not a valid MySQL result resource in /home/.sites/28/site1/web/shared/shared.inc.php on line 53

brandon272• 17 years ago

I would get in touch with a qualified accountant or bookkeeper who has experience in payroll. There are a lot of things to bear in mind and options to consider when you're doing payroll and having to calculate tax deductions. Miscalculating can lead to audits.

stanleydrew8• 17 years ago

You have someone you can recommend?

akmiller• 17 years ago

I currently use PayCycle and they provide a very nice solution and it's very affordable. Intuit recently acquired them, so I imagine they will become even more integrated into their tools.

mattmaroon2• 17 years ago

We use ADP. It's not very expensive and they do a good job of handling everything. I hear it can be quite costly if you're having people punch in and out, but for just a few guys programming on salary the cost is less than you'll probably spend on coffee.

Anyone who has a small team of engineers and does it themselves is insane. You'd gain more from staying in the programming zone for 5 minutes than you'd save in processing costs.

stanleydrew8• 17 years ago

Other posts here seem to think ADP is expensive for their use cases. Just for the record would you recommend ADP for very irregular payroll processing? Like once every six weeks say? We're not really "on salary."

mattmaroon2• 17 years ago

Then it's even cheaper. They charge us per pay period. It's a few bucks per person per check.

jgilliam• 17 years ago

I use SurePayroll and recommend it. It takes care of all the tax stuff, and you can include 1099 contractors as well as W2 employees.

abalashov• 17 years ago

I use Paycycle.com. It's great!

nickadams• 17 years ago

My company uses Bank of America Online Payroll. We are an S-Corp with no full-time employees other than the two founders/shareholders.

The Bank of America option is free if you are depositing directly to a BoA account. Being that both me and my business partner have BoA, this works for us.

The free version also allows you to file all the federal payroll tax forms, which is handy. It doesn't allow you to file the state payroll tax forms though, but if you live in NY (not sure about other states), you can do that all online directly through the states tax website.

You also need to remember to file with your state for unemployment insurance, which is a separate department from the tax department (at least in NY). And if you have other employees who aren't shareholders, you'll also need to register for workers comp insurance.

One trick I'll pass along -- with the disclaimer of talking to your accountant first -- is this:

If you need to minimize payroll costs, you can do some planning and pay yourself once per fiscal year, usually in Dec.

What you do is figure out what you think you need to make this year for a "reasonable salary" and pay that in one sum in Dec. The rest you can take as equity draws throughout the year, saving you the payroll processing expense each paycheck.

If you don't think you'll make enough to get a "reasonable salary", you can take your draws throughout the first 3 quarters, and then in the 4th quarter, try to have enough left in the back so that you pay yourself 1/2 of the total draws so far as payroll (Example: 18k yearly total > 12k over first 3 quarters, then final 6k through payroll in Q4).

This allows you to save some payroll processing costs, and make filing the forms easier -- it's just for one quarter, with the other 3 being zero-returns (which you still need to remember to do over the first 3 quarters).

But again, talk to your accountant.

Ask HN: Payroll for bootstrapped startups?

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