A small startup micro-business client asked today about setting up payroll for the first time beginning January 2025. Fortunately, I have a good track record of doing that on short notice. This is my response reproduced below, that might be valuable to other small businesses.
Good to hear from you.
Happy holidays!
Yes, I will handle payroll setup simply, quickly, and at the lowest possible cost.
However, running payroll is a years’ long commitment with a minimum cost commitment to get through the year-end filings that are done a year from now in January 2025. There are two main costs:
Employer’s mandated payments. These costs add about 15% above the amount of wages. This is for wage tax, state tax, mandated benefits, and workers compensation coverage. Some industries like yours could have higher workers compensation costs. I will get a quote for that cost.
Employer’s cost for payroll administration (me). Generally $2,000/year overhead cost based on a mix of salary, hourly, and non-employee contractors. I will give specific costs after we get more information.
The simplest, easiest, safest, most reliable small business payroll system works like this:
- Workers (employees and contractors) give us their email addresses and authorize payments to be made to their bank account. I handle the setup. They find it easy and convenient as long as they have minimal online capabilities.
- Everyone has access to an app with a secure account to get all data. I serve as a backup information source.
- You text me the hours worked, any bonus, contractor payment and reimbursement. Some employees might be regular recurring salary on automatic. I confirm this is paid within 24 hours.
- The most important thing is that there is enough money in your business bank account to cover the expense. If you need me to confirm that there is enough money in the business bank account each time, and move this temporarily to a payroll funds reserve account, then we need to add this feature separately.
- I am available as usual (text, phone, and email) to you and to workers for questions about payroll and benefits.
- I handle all required filings and communications with government.
- If applicable, I handle the worker’s compensation audit and government audit response.
- This assumes that other business operations remain pretty much the same as we did this past year. It that changes, we will reconsider the necessary changes then.
I can get payroll set up in about two business days once we have the initial information and you confirm that you can cover my administration cost. While you can quit anytime, stopping mid-year could leave some tasks incomplete. So I recommend that you commit to this for the full year.