The Easy Way to Run Payroll

Payroll usually means headaches. But whether it’s easy or hard on you depends on how you set things up. In this post we’ll explain one of the easiest ways to run payroll for your startup or small business.

First, Some Background

When you pay an independent contractor, things are usually easy. You pay them and they take care of their own tax obligations. That’s it! (Although, sometimes you have to give them a 1099. See this for more.)

But when you hire employees (or if you are a solopreneur running an S-Corp (see this)), things get more complicated. That’s because it is your responsibility to withhold certain portions of an employee’s wages for taxes and remit those portions to various government agencies. In many situations, you also have to deal with unemployment insurance and workers compensation. (See this post for the differences between employees and contractors.)

For the last seven years, I’ve been running payroll for myself and my employees, and also paying independent contractors. To avoid all those headaches, I use Gusto.

How Gusto Works

Gusto is a cloud-based payroll service provider. After creating your account and uploading all your company’s financial information, you can run payroll in minutes. I run mine every other week.

When you hire an employee (or even an independent contractor), you simply insert their name and email into Gusto’s system and then Gusto will send them all the forms to fill out. Once completed, you can fill in the employee’s payroll information (hourly, salary, PTO, etc.) and then either process payroll yourself, or set it up to run automatically.

Gusto will take the money out of your account, pay the right amount to your employees (and contractors), and hold back the proper taxes in Gusto’s escrow accounts. They then pay that money to the proper government agencies and also manage other filings with the government for you. Gusto also offers a ton of other benefit tools and packages, which I don’t use. But I suspect they are just as easy to use.

Their pricing structure is also simple. Depending on the plan you need, it’s usually $19 or $39 per month, plus $6/month for each person you pay through the platform.

Click here to check out Gusto!

(This article is general in nature and is not legal advice. The links in this post are referral links. Image: Adobe/Visual Generation)