Navigating Payroll Options for Startups
Payroll Options for Startups:
Selecting a payroll option for your startup can be a very challenging task. Given that the different types of options for businesses are seemingly endless, choosing a payroll option can feel very overwhelming at times. This blog seeks to cover four main providers that startups can utilize to run their payroll effectively: Thera, Gusto, Justworks, and Rippling. While at first glance these options may seem very similar, each platform has its own individual specializations that can benefit different types of businesses with varying interests and goals.
The first, and most straightforward payroll option for startups, is our very own all-in-one payroll platform here at Thera. Our platform was designed specifically with startups in mind, especially those operating remote and at a global scale. Thera’s most basic offering is a standard W2 Payroll service for US companies looking for a quick way to handle the burdensome tasks associated with payroll, taxes, and benefits administration. Global startups can utilize Thera’s contractor management to easily hire and pay employees in a compliant manner or our employer on record (EOR) system for complete HR management.
There are a few benefits of utilizing Thera as payroll management for your startup:
- Cost-effective: Thera’s affordable per-employee pricing plan is advantageous for startups looking to limit spending on services they don’t need. Standard payroll costs $10 per employee per month.
- Global: Thera is locally compliant in 135+ countries meaning we can easily handle the challenging administrative work associated with harboring employees at an international scale.
- Individual Support: Thera offers users a dedicated Slack channel for direct engagement with our support team for any questions and answers regarding your payroll or workforce management.
However, it should be noted that Thera’s services and platform are best suited for smaller startups. If your business has over 200 employees, considering other providers may be in your best interest.
Another payroll software provider that startups could utilize is Gusto. Gusto operates in a similar niche to Thera, with a multi-faceted HR platform that offers automated payroll, health benefits, and people management services to customers at varying prices.
Gusto may pose an advantage for startups looking to:
- Provide health benefits: Gusto’s platform facilitates the rollout of health (medical, dental, vision) and financial (budgeting app, 401k, etc.) benefits for employees.
- Hire efficiently: Gusto’s platform hosts a recruiting software that allows you post jobs to popular job boards, track applicants, and run background checks. While this isn’t payroll-related, it is an additional feature that makes internal HR easier for startups
However, Gusto has some potentially disadvantage for startups:
- High Cost: Gusto also has a three-tier subscription pricing model like Thera, but prices much higher. Standard payroll at Gusto costs $40 flat fee + $6 per employee per month, while the comprehensive plan (which includes access to HR management software) costs $80 flat fee + $12 per employee per month. The premium plan – which includes personalized HR services – is priced on a company basis.
- Extensive services: While a multitude of offerings can serve as a benefit for some companies, startups solely looking for a payroll provider may feel that they are paying a higher rate for features they do not need.
Justworks is another payroll software that provides similar services to both Thera and Gusto. Justworks has two PEO plans that handle a multitude of different administrative and benefits tasks associated with running payroll and workforce planning.
Some advantages of using Justworks include:
- HR Tools: Justworks platform eases various administrative tasks and provides important tools for employee onboarding, management, and benefits. Employers can opt in for healthcare benefits if they see fit.
- Scalability: Justworks also maintains a per-employee pricing model, and offers a $10 discount per employee once a business has reached 50 or more employees. Thus, startups looking to scale and increase their employee count may consider this a potential advantage.
While Justworks offers a simple and efficient payroll option for startups, there are also some potential drawbacks of its services:
- High cost: Justworks costs more than both Thera and Gusto, pricing at $59 per employee per month for their basic plan, and $99 per employee per month for their plus plan (with access to health benefits administration)
- Location: While Justworks is still an effective software for remote teams, their services and HR management is only limited to the United States. Startups with Global teams would have to utilize a different service provider to file administrative work for international employees, which may be too costly of an option for certain companies.
Finally, the last main payroll platform for startups is Rippling. Rippling provides customers a software platform that simplifies HR, IT, and financial management.
There are a few positives of using Rippling as a startup:
- Integrations: Rippling partners with other apps like Google Workspace, Slack, Carta, Oracle NetSuite, etc. Their partnerships with many popular apps and companies makes implementing and managing their platform relatively easy for digitally-adept companies.
- Bundled Services: Startups looking for access to a large amount of services may find Rippling as a better option for use as a centralized system used throughout their business.
- Global: Rippling’s global workforce management system can be utilized in over 50 countries, which can eliminate unnecessary administrative work for companies with scattered, international presences.
However, Rippling also has some drawbacks that customers should consider when choosing their payroll software provider:
- Lack of Transparent Pricing: Rippling prices on a case-by-case basis, meaning that startups have a limited understanding of how much they are going to pay initially. Prices could either be per-employee per month or variable and are at Rippling’s discretion.
Excessive Offerings: Rippling’s finance, IT, and HR platform may be overwhelming for startups who are solely looking for a payroll provider and do not want to pay extra for services that they do not need.