Managed Payroll · Payroll for Startups
Payroll for startups from BEG is a managed service, not another app for the founder to run. A named payroll manager handles state registrations, new-hire reporting, deposits, quarterly filings, multi-state withholding, equity tax events and year-end W-2s inside your existing platform or on isolved, at $25 to $45 per employee per month with a $500 monthly minimum, live in 3 to 5 business days.
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TL;DR
A startup's payroll gets harder every time it hires in a new state, pays a contractor, grants equity or crosses a deposit threshold, and the founder is usually the one holding it together between funding rounds. BEG runs the whole function: registrations, new-hire reporting, deposits and filings, multi-state withholding, option and RSU tax events, the R&D payroll tax credit on the 941, and year-end. $25 PEPM inside the platform you already use or $45 PEPM on isolved, $500 monthly minimum, no per-state or per-filing fees. Live in 3 to 5 business days, no migration.
Why Startups Are Different
Because a startup adds states, contractors, equity and headcount faster than anyone updates the payroll setup, and the founder is the payroll department. Every one of those changes carries its own registration, deadline and penalty.
A 12-person startup can have employees in five states, three contractors, an option pool and a founder drawing an S corporation salary. That is more payroll surface area than a 60-person company that hires locally and pays everyone the same way.
Setup Checklist
Get an EIN, open withholding and unemployment accounts where employees work, collect Forms W-4 and I-9, report hires within 20 days, set a legal pay schedule, and deposit taxes monthly in year one.
Payroll software prompts you for most of this. It does not know which state your newest hire actually works from, and it does not open the state accounts for you.
| Step | The rule | Where startups slip |
|---|---|---|
| 1. Federal EIN | Free and issued online by the IRS employer identification number application. Needed before the first payroll, the first state registration and the first business bank account. | Running the first payroll under an EIN issued to the founder as a sole proprietor, then incorporating. The corporation needs its own EIN, and filings under the wrong one have to be unwound. |
| 2. State withholding and unemployment accounts | Required in each state where an employee performs work, before that employee's first paycheck. Each state issues its own account numbers and its own unemployment insurance rate. | The first remote hire. The account gets opened after the quarter closes, which means a late wage report and a rate notice nobody keyed in. See multi-state payroll. |
| 3. Form I-9 | The employee completes Section 1 by the first day of work; the employer completes Section 2 within 3 business days of the first day of work for pay, per USCIS instructions for Section 2. | Remote hires. The documents have to be examined, not just collected in a shared folder, and the three-day clock starts on the first paid day, not the offer date. |
| 4. Form W-4 and state certificate | Each employee gives you a federal W-4 before the first paycheck, and many states have their own certificate. Without a W-4, withhold as single with no adjustments, per IRS Publication 15. | Collecting the federal form and skipping the state one, so state withholding runs on a default the employee never chose. |
| 5. New hire reporting | Report every new hire to the state directory within 20 days of hire under federal law; states may require it sooner, per the Office of Child Support Services. | Nobody owns it. Software files it automatically in some states and only if a box was checked during setup in others. |
| 6. Pay schedule | Choose weekly, biweekly or semimonthly, then check the payday law in every state where you have employees. Several states cap the interval and set how many days after the period wages must be paid. | A monthly schedule chosen for cash flow that is not allowed for hourly staff in the employee's state. Check any state with the state payroll compliance checker. |
| 7. Federal deposit schedule | New employers are monthly depositors for their first calendar year: taxes on a month's payroll are due by the 15th of the following month, unless $100,000 accumulates on one day, which is due the next business day, per Publication 15. | Growth. The lookback period moves you to semiweekly deposits once reported taxes pass $50,000, and one large hiring month or bonus run can trip the $100,000 rule. |
| 8. Quarterly and annual returns | Form 941 each quarter, Form 940 each year for FUTA at 6.0% on the first $7,000 per employee, reduced to 0.6% with the state credit, per IRS Topic 759, state quarterly wage reports, and W-2s to the Social Security Administration by February 1, 2027 for 2026 wages, per the 2026 General Instructions for Forms W-2 and W-3. | The first year-end, when four quarters of 941s have to tie to the W-2 totals and nobody reconciled the first quarter. |
BEG does every step on this list as part of onboarding, and keeps doing steps 2, 5, 7 and 8 every time the company adds a state, a hire or a quarter. The full deposit and filing calendar is on the payroll tax filing services page.
Software, PEO, EOR or Managed
Software works under about ten single-state employees when a founder will run every cycle. A PEO or EOR fits co-employment or foreign hiring. Managed payroll takes the work off the founder under your own EIN.
| Option | Who does the work | Who employs your team | How it is priced | Fits when |
|---|---|---|---|---|
| Founder plus payroll software (Gusto, Rippling, QuickBooks Payroll, ADP RUN, Square) | You do. The software calculates and files what it was told to file, in the states it was told about. | You | A monthly base fee plus a per-employee fee, with add-ons for contractors, benefits and HR. See alternatives to Gusto and alternatives to Rippling. | Under about ten employees in one state, no equity events, and a founder or office manager who owns every cycle. |
| PEO (Justworks, TriNet, ADP TotalSource) | The PEO runs payroll and files under its own EIN. | Co-employment: the PEO and you | Per employee per month or a percentage of payroll, bundled with benefits and HR. | You want PEO-pooled benefits and accept co-employment. See the PEO alternative before signing. |
| Employer of record (Oyster, Deel, Remote) | The EOR employs the worker through its own entity and pays them. | The EOR | Per employee per month, higher for international employees. | You are hiring in a country where you have no entity. Not needed for US employees you can hire directly. |
| Managed payroll (BEG) | A named BEG payroll manager runs every cycle, registration, deposit, filing and notice. | You. Filings run under your EIN. | $25 PEPM in your existing platform or $45 PEPM on isolved, $500 monthly minimum, all-inclusive. | You want payroll off the founder's desk without changing your EIN, your platform or who employs your team. |
The four options are not exclusive. A startup with 18 US employees on Gusto and two engineers in Portugal runs BEG inside Gusto for the US team and an EOR for the two abroad. The mistake is paying for an EOR or a PEO to solve a US problem that a managed service inside your current software already solves.
What Is Included
Everything from the first state registration to the year-end W-2: new-hire reporting, every deposit and return, multi-state withholding, contractor payments and 1099s, equity tax events, founder payroll, benefit deductions and the R&D payroll credit.
You keep your platform, your EIN and your employer decisions. BEG keeps the calendar, the accounts and the reconciliation, and answers the notices with you.
Setup and every cycle
Startup-specific
All of it inside the $25-$45 PEPM rate, with no per-state, per-filing or year-end charge. A one-time $300 multi-state setup applies when the team spans more than one state, and it shows on the instant quote. See the full scope on the managed payroll services overview.
The Credit Most Startup Payroll Setups Miss
Yes. A qualified small business with under $5 million gross receipts and none more than five years back can apply up to $500,000 of research credit a year against employer Social Security and Medicare tax.
The election is made on Form 6765 with a timely filed income tax return, and the credit is claimed on Form 8974 attached to the quarterly Form 941, starting with the first quarter after that return is filed. It offsets the employer share of Social Security tax up to $250,000 per quarter, then the employer share of Medicare tax, and any excess carries to the next quarter, per the IRS guidance on the qualified small business payroll tax credit. The cap doubled from $250,000 for tax years beginning after December 31, 2022. Eligibility, the $5 million gross receipts test and the five-year window, is defined in the Instructions for Form 6765.
Where it breaks: the credit lives on the payroll return, not the income tax return. A CPA or R&D study firm computes it, and then someone has to carry the elected amount onto Form 8974 every quarter, reduce the deposits correctly and reconcile the 941. When the founder runs payroll in an app, that is the step that gets skipped, and the credit sits unclaimed until an amended return. BEG applies the elected amount each quarter and keeps wage records coded by project so next year's claim is documented rather than reconstructed. BEG does not compute the credit; that stays with your CPA. Background on the other credits that run through payroll is in payroll tax credits managed payroll can capture.
Equity Compensation
Nonstatutory option exercises and RSU vestings are wages, withheld and reported on the W-2. Incentive stock options are not withheld at exercise. Section 83(b) elections are due within 30 days of the stock transfer.
The full walkthrough, including ISO and NSO withholding math, is in startup payroll with equity compensation.
Founder Pay and Contractors
In an S corporation, an officer doing more than minor work must be paid reasonable wages before distributions. Working founders of C corporations are employees too. Contractor status follows the working relationship, not the contract.
The IRS states that distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent they are reasonable compensation for services, and that it can reclassify distributions as wages when they were paid in place of salary, per its guidance on S corporation compensation. A founder who takes draws all year and no salary has a payroll tax problem waiting for the first audit or the first funding round diligence. The entity-by-entity rules are in owner draw vs. salary.
Contractors are the other early-stage shortcut. For federal employment tax, the IRS looks at behavioral control, financial control and the relationship of the parties, and it says directly that the actual working relationship controls, not the terms of the contract, per IRS guidance on independent contractor or employee status. A full-time engineer on a 1099 with a company laptop and a manager is an employee with unpaid employment taxes. For contractors who really are contractors, 1099-NEC reporting starts at the $2,000 threshold for payments made in 2026, per the IRS instructions for Forms 1099-MISC and 1099-NEC. BEG checks classification before the first payment and runs both populations; see payroll for 1099 contractors.
The Math at Startup Headcounts
$25 per employee per month inside the platform you already use, or $45 on isolved, with a $500 monthly minimum. The minimum binds below 20 employees on the existing-platform rate and below 12 on isolved, so an 8-person startup pays $500 a month on either tier. At 20 employees it is $500 in your platform or $900 on isolved. At 25, $625 or $1,125. At 40, $1,000 or $1,800. A one-time $300 setup applies when the team spans more than one state. Set that against the alternative most startups actually use, which is the founder: the payroll clerk that a larger company would hire has a national median wage of $58,260 before benefits and employer taxes, and the founder's hours are worth more than that clerk's. The question is not whether $500 a month is cheaper than a hire. It is whether the hours the founder spends on payroll each month are worth more than $500 to the company.
What a Scope Review Includes
BEG reads your current state registrations against where your employees actually sit, your deposit schedule against your liability, your contractor list against the IRS test, and your equity plan against what payroll has recorded. Any gap is the deliverable. Live managed payroll runs 3 to 5 business days from signing, inside your current platform, no migration.
The Honest Answer
Under ten employees in one state, with no equity events and a founder who runs every cycle on time, software is enough. The handoff point is the first out-of-state hire, option exercise or missed deposit.
BEG says the same thing on its payroll for 10 employees page. The case for managed payroll is not that software is bad. It is that a startup outgrows the assumptions software makes faster than any other kind of company: one state, W-2 only, no equity, someone at the keyboard every cycle. When those assumptions break, the app keeps running and the errors accumulate quietly until a notice arrives. By 25 employees most startups have broken all four. If you are weighing doing it yourself against handing it off, DIY payroll vs. managed payroll lays out the tradeoffs without a pitch.
Free Tool
Hired someone in a state you have never run payroll in? The state payroll compliance checker shows that state's 2026 minimum wage, paid leave mandate, income tax status, payday rules and new-hire reporting deadline on one screen, no email required. Run it before the first paycheck to a remote hire, not after the first notice.
FAQ
The one that matches who will do the work. If a founder will run every cycle, software such as Gusto or Rippling is enough under about ten single-state employees. If nobody should be running it, a managed service that works inside that same software is the next step without a migration. BEG runs payroll in your existing platform at $25 PEPM or on isolved at $45 PEPM.
$25 per employee per month inside your existing platform or $45 on isolved, with a $500 monthly minimum, so a startup under 20 employees pays $500 a month on the existing-platform rate. There are no per-state, per-filing or year-end fees. A one-time $300 setup applies when employees sit in more than one state. See managed payroll pricing for the full table.
No. At $25 PEPM, BEG runs payroll inside the platform you already pay for, so nothing migrates and your history stays where it is. If you would rather consolidate onto isolved, the $45 PEPM rate includes the platform. Either way, live payroll runs 3 to 5 business days from signing.
Yes, in all 50 states and the District of Columbia. BEG opens the withholding and unemployment accounts, files the new-hire reports, withholds by work location, applies reciprocity where it exists and files every state return. The mechanics are on the multi-state payroll page.
Contractors are paid through the same process, classified against the IRS common-law test first, and issued 1099-NEC forms at the $2,000 reporting threshold for 2026 payments. For employees in countries where you have no entity, you need an employer of record; BEG manages the US payroll and coordinates with the EOR so the two never overlap.
Yes. Once your CPA elects the credit on Form 6765, BEG carries the elected amount onto Form 8974 with each quarterly Form 941, reduces the employer Social Security and Medicare deposits correctly, and carries any excess forward. BEG does not compute the credit itself; that stays with your CPA or R&D study firm.
3 to 5 business days from signing, with no migration. BEG reviews your registrations, deposit schedule and employee records, opens any missing state accounts and runs the next scheduled payroll. Mid-year switches are routine; how to switch payroll providers covers who files the final returns with a previous provider.
No. A PEO becomes the co-employer of your staff and files under its own EIN. BEG never employs your team; payroll runs under your EIN, in your platform or on isolved, and you keep every employer decision. BEG is headquartered in Dallas-Fort Worth and delivers the service remotely nationwide.
Related reading
See managed payroll for technology companies, or all managed payroll services.
More managed payroll pages
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