Ask HN: Simplest way to start paying people?

[robinwarren]

Hi Folks,

I'm working on something and wondering what the quickest way to get setup to be able to pay people money would be. Basically I'll be taking money of one group (probably businesses) and then paying some of that money to others (probably individuals). I'm wondering what the simplest way to get a proof of concept up would be for the paying money to individuals part. Can I just require everyone to have a PayPal account? Or would something else be easier/better.

If anyone has a recommendation as to the best way to do this as opposed to the quickest way I'd be interested in hearing that as well, thanks.

Robin

==edit== Ok, trying to be more specific. What would be the easiest way technically speaking to arrange payments from a webapp to individuals? And are there any.specific gotchas to be aware of.

Thanks for the help.

== Edit 2 == Payments will be 10s or $100s

[kandu]

I am interested in the same issue.

There seem to be various service providers for doing the actual payment, i.e. https://www.x.com/community/ppx/mass_pay or http://www.arvatodigitalservices.com/fileadmin/case_studies/... .

However, I would like to know in which countries a business could be legally do something as mass paying thousands of individuals without going into the hassle of signing contracts with each of them.

Are you based in the USA or elsewhere?

If you pay an individual, aren't you supposed to pay to the fiscal authorities any tax for the wage you pay?

Which are the startup-friendly countries where this kind of mass payments are possible without bureaucratic hassles?

[kandu → kandu]

For example, in the USA, "You generally must withhold federal income tax from your employees' wages. You withhold part of Social Security and Medicare taxes from your employees' wages and you pay a matching amount yourself." - http://www.irs.gov/businesses/small/article/0,,id=172179,00....

"If you classify an employee as an independent contractor and you have no reasonable basis for doing so, you may be held liable for employment taxes for that worker" - http://www.irs.gov/businesses/small/article/0,,id=99921,00.h...

I assume that the US law allows "contracts" that are "signed" or agreed with one click on the "I agree with the terms and conditions" checkbox, and this contract would establish the paid individual as an independent contractor, and then the paying business has no burden of tax payment on behalf of the individual.

Do you have any information about the legal framework for similar issues in UK or Ireland?

[robinwarren → kandu]

Not yet! Time for some more research I think.

[kandu → kandu]

Here are some pointers to regulations in the UK:

PAYE (Pay As You Earn) is the system that HM Revenue & Customs (HMRC) uses to collect Income Tax and National Insurance contributions (NICs) from employees' pay as they earn it. The term 'employee' in this guide includes directors of limited companies.

As an employer, you'll have to deduct tax and NICs from your employees' pay each pay period and pay Employer's Class 1 NICs if they earn above a certain threshold. You pay these amounts to HMRC monthly or quarterly. If you don't send the correct amount, or if you send it in late, you may have to pay interest. After the end of the tax year you must send HMRC an Employer Annual Return (form P35 and forms P14). Almost all employers are required to send this online. http://www.hmrc.gov.uk/paye/intro/basics.htm

Employed or self-employed?

A worker's employment status, that is whether they are employed or self-employed, is not a matter of choice. Whether someone is employed or self-employed depends upon the terms and conditions of the relevant engagement. The tax and National Insurance contributions (NICs) rules do, however, contain some special rules that apply to certain categories of worker in certain circumstances. See section on special cases. http://www.hmrc.gov.uk/employment-status/index.htm http://www.hmrc.gov.uk/leaflets/es-fs2.pdf

And here is the info for Ireland:

Employer's Guide to PAYE http://www.revenue.ie/en/business/paye/guide/index.html

Code of practice for determining employment or self-employment status of Individuals http://www.revenue.ie/en/tax/it/leaflets/code-of-practice-on...

[robinwarren → kandu]

I'm in the UK. I'd not considered it could be an issue tbh. I'm not intending to employ people. Google and others manage to pay amounts to advertisers I assume without these hassles. I'm not at my pc atm to investigate that further right now.

[kandu → robinwarren]

I assume that every country has some laws to prevent: 1) That actual employees are declared as independent contractors for the purpose of evading the payment of social security and medical taxes. 2) That the individual that gets paid also declares the revenues and pays the corresponding income taxes. 3) Money laundering and financing terrorist activity.

In the case of my country in Eastern Europe these laws are so tight that they require either: - the independent contractor to be officially registered with the governmental authorities and authorized as such, or - to be considered as an employee, which has to sign with the business a paper contract that also has to be registered with the authorities, and for which social security and medical taxes must be paid.

This makes impossible running in my country a business based on the model that you are also interested in.

Could you discuss what the law allows in UK, Ireland, Cyprus or other European country?

[nyellin]

Your question is too vague. Please provide concrete details, or answers will be abstract and useless as well.

[robinwarren → nyellin]

Hopefully the edit clarifies things

[justinph]

Not sure what the simplest would be from a tech perspective (probably paypal). But I'd only pay people once they've built up enough of a balance to make it worthwhile to do a payout. At the very least, you'd reduce your payout throughput that way.

[F00b4r]

The best answer depends on the magnitude of the payments. Are we talking about penny/dollar payments or O($100) or O($1000) payments?

[robinwarren → F00b4r]

I'd be interested in your recommendation for dollar amounts as it's actually likely to be 100s at a maximum really. Thanks

[F00b4r → robinwarren]

With small payouts, a significant percentage of the payments will be taken by the middlemen.

With large payouts, people will have to wait a long while before the first payment, and may end up believing its a scam.

If you dont mind can you describe what you are doing?

[robinwarren → F00b4r]

Hi, sorry for the secrecy. Without going into too much detail, i'd be taking larger payments from businesses and paying chunks of multiple of those payments each to individuals. Similar perhaps to adsense. Ie a single individual wouldn't just get say 10% of a single payment but of several.

[F00b4r]

It sounds like you are looking for something like Obopay [where you can send money to their bank account if they give routing information].

I would check with your bank. IIRC Bank of America provides this service.

[robinwarren → F00b4r]

Thanks, i'll look into that

[moreofalurker]

You might want to check out wepay.com / not sure whether that is what you are looking for, but it might be worth taking a look.