

Ask HN: Payroll for bootstrapped startups? - stanleydrew

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?
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mattculbreth
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.

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stanleydrew
How much does BofA charge for this service?

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

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mattculbreth
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.

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kriyative
I believe you'll need the Plus service if you want to e-file state taxes,
which runs $36/mo. Check out the "Rates & Fees" tab at:
[http://www.bankofamerica.com/small_business/online_banking_a...](http://www.bankofamerica.com/small_business/online_banking_and_services/index.cfm?template=payroll_services)

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nickadams
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.

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ilener
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.

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stanleydrew
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

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lrm242
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.

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stanleydrew
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.

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aditya
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.

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

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j2d2
I'm not sure if this will do what you're looking for, but I really like
Harvest.

www.harvestapp.com.

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stanleydrew
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?

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j2d2
I don't think so. Sorry! They're VERY good with correspondence though.

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brandon272
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.

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stanleydrew
You have someone you can recommend?

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

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mcculley
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.

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bsaunder
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.

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mcculley
Yes, their system is browser based.

Greasemonkey would probably work fine as you described, but I would be more
comfortable with an actual API when committing funds.

Even with an API, I would probably still want to review the transaction on the
web UI before committing.

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sachinag
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).

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dryicerx
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?

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mattmaroon
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.

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stanleydrew
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."

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

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jgilliam
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.

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spencerfry
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".

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

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

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akmiller
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.

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abalashov
I use Paycycle.com. It's great!

