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Guide

A Founder’s Guide to Payroll for Startups

US payroll

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In this guide

This comprehensive guide provides insights into:

1. Defining your growth strategy

  • When to hire employees vs. independent contractors
  • Payroll options for paying yourself as a founder
  • Understanding the payroll tax implications of your business structure

2. Paying employees under owned entities

  • Payroll setup and compliance for US employees
  • Managing local payroll taxes and federal state and local regulations
  • Health insurance and benefits administration considerations

3. Managing payroll across multiple states

  • State and local tax requirements for payroll
  • Differences in payroll tax rates and compliance rules
  • Payroll services to help manage multi-state employees

4. Hiring and paying employees without a legal entity

  • Employer of Record (EOR) solutions for hiring globally
  • Tax compliance and payroll system benefits

5. Paying independent contractors

  • How to classify workers correctly to reduce misclassification risks
  • Software for startups to automate contractor payroll

6. Paying yourself as a founder

  • Salary vs. owner’s draw vs. equity compensation
  • Tax implications and payroll tax obligations

The essential payroll guide for startup founders

Setting up and managing payroll for a startup can be overwhelming. From complying with federal, state, and local tax regulations to choosing the right payroll setup for employees and contractors, founders face numerous challenges.

Our expert guide walks you through payroll processes, tax compliance, and payroll services tailored for early-stage companies.

Why payroll matters for startups

Managing payroll correctly is crucial to:

  • Pay your team on time — whether full-time, part-time, or contract workers
  • Ensure tax compliance — including payroll tax and state and local taxes
  • Attract and retain top talent — with competitive compensation and benefits administration
  • Streamline payroll processes — with the right payroll system or software for startups

Simplify payroll with Deel

An all-in-one payroll solution like Deel helps startups run payroll seamlessly while ensuring compliance. With Deel, you can:

  • Pay full-time and part-time employees, contractors, and EOR workers
  • Automate tax filings and payments at the federal, state, and local levels
  • Access benefits administration and health insurance options
  • Get expert customer support to navigate complex payroll processes
  • Scale with an all-in-one payroll and HR platform

Download the guide now to take the guesswork out of payroll and focus on scaling your startup.

FAQs

To set up payroll for your startup, you need to:

  1. Register for an Employer Identification Number (EIN) with the IRS.
  2. Set up state and local tax accounts based on where you operate.
  3. Classify workers as employees or independent contractors.
  4. Choose a payroll system to automate calculations, tax withholdings, and payments.
  5. Comply with federal, state, and local tax requirements.

Deel simplifies payroll setup with automated compliance tools, tax processing, and payroll services designed for startups.

Small business owners handle payroll by:

  • Manually calculating wages and payroll tax deductions
  • Using payroll software for startups to automate payments
  • Outsourcing to payroll services for full compliance support

Deel provides an all-in-one payroll solution to streamline payroll processes, tax filings, and benefits administration.

The best payroll program for small businesses depends on your needs. A good payroll system should offer:

  • Automated tax compliance (federal, state, and local taxes)
  • Payroll options for employees and contractors
  • Time tracking and payroll tax management
  • Benefits administration

Deel offers a global payroll platform with comprehensive payroll services for startups of all sizes.

While it’s possible to do payroll manually, it can be time-consuming and prone to errors. Free payroll options exist but often lack essential features like:

  • Automated tax calculations
  • Payroll tax filings
  • Compliance monitoring

Deel’s payroll services handle all aspects of payroll, ensuring you stay compliant and efficient.

If you operate as an LLC, payroll depends on your business structure:

  • Single-member LLCs: Owners typically take an owner’s draw rather than a salary.
  • Multi-member LLCs: Members receive distributions, not wages.
  • LLCs taxed as corporations: The business runs payroll and pays payroll taxes for employee-owners.

Learn more: Startup Founder Salary: How to Pay Yourself as a Startup CEO

Yes: Deel Payroll.

Deel Payroll offers one platform to pay teams locally or globally, run payroll on your own or with Deel’s experts. Deel Payroll delivers the same consistent experience with global coverage, real-time accuracy, and built-in compliance.

  • One product, one platform: Manage domestic and global payroll in a single system that connects payroll, HR, payments, benefits, and compliance across 130+ countries.

  • Built for every stage of growth: Deel Payroll supports small businesses and enterprises alike, adding expert support and integratrations with Workday and SAP when you need them.

  • Global reach with local compliance: Deel provides accurate, compliant payroll through its own infrastructure and in-country expertise—not outsourced providers.

  • Real-time processing where it matters most: Native gross-to-net calculations in 50+ countries enable instant results, faster pay cycles, and smoother integrations.

  • A single source of truth for your workforce: Payroll sits alongside HR, IT, and Benefits in Deel, giving you unified visibility into people spend, rewards, and compliance.

  • Benefits that flow automatically: Direct integration with Deel Benefits keeps enrollments, deductions, and contributions synced into every pay cycle without manual updates.

  • Enterprise-grade reliability and scale: Trusted by 37,000+ companies, backed by 2,000+ in-house specialists, with 99.9% payroll accuracy and fast implementations.