A Startup's Guide to Setting Up Payroll

Introduction

For many founders, setting up payroll is a milestone moment in starting up a company - it means you’re coalescing a team around your common mission to solve a problem. However, the logistics of setting up a payroll operation can be complex. We have put together best practices for how to set up a payroll operation that can scale with you as you start and grow your business.

Step 1: Determine Your Compensation Structure

How you decide to pay your team is the key first question to answer when getting started. Traditionally, startups pay their employees in a mix of salary and equity. For businesses operating onchain tokens might also be part of a compensation package. Depending on the types of workers you bring on there are other types of payments you may wish to support like:

• Tips

• Timesheets for hourly workers

• Commissions

• Bonuses

Step 2: Classify Your Employees

Properly classifying your employees is crucial for payroll and tax purposes. Determine whether your employees are full-time, part-time, salaried, or hourly. Additionally, classify your employees as either:

• Exempt from overtime pay

• Non-exempt from overtime pay According to the Fair Labor Standards Act (FLSA).

Step 3: Get Your Corporate Info In Order

The bare minimum needed to get started with employing workers is to have:

• An incorporated entity

• An Employer Identification Number (EIN)

Step 4: Choose a Payroll System

Most payroll platforms transport you back to the 1990s with how outdated their interfaces are. Large payroll platforms also saddle the burden of payroll administration to their users - things like applying for workers compensation insurance, corporate registrations to employ people in different states, etc.

Founders no longer need to be tethered to antiquated, slow, and expensive solutions. Solutions like our own at Franklin are tailor-made for founders looking for a complete, modern solution.

Setting Up A Franklin Account

You can set up your account with Franklin and start using it on the same day. In the sign up process, we collect the following information:

• Company Vital data like address, EIN, phone number

• Beneficial Ownership of the business - for compliance checks

• Administrator Information - who is going to be running payroll

• Business Bank Account

• Business Wallet (if using crypto to make payments)

Hiring and Payment Process

From there you’ll be able to start hiring your team members and making payments. To learn more about how to accurately hire workers, check our our knowledge center article on worker classification.

Seeking Further Guidance

If you’re unsure about any aspect of payroll management, don’t hesitate to seek professional advice. Our team at Franklin is always available for chat as well to help guide you in the right direction. Feel free to reach out anytime.