5 HR & Payroll Errors That Startup's Often Makes

Startups are real rule breakers. But HR and payroll errors are too common, and one part where companies don't want to break the rules.

Startups are real rule breakers. You’ve got to ruffle a few feathers and disrupt the status quo if you want to build the next Linkedin. But there’s one area where startups definitely don’t want to break the rules: payroll and HR.

Startups that don’t comply with payroll and HR laws can face serious legal and financial consequences. Some penalties are even severe enough to (almost) drive them out of business. With that in mind, we've put together this list of the five biggest startup payroll and HR mistakes to avoid.

1. Mixing Business and Personal Finances

In the early days of a startup, having a business bank account can seem like a bit of a pointless activity. Brand new companies are rarely making any money and it might seem to the founder that there's no point in pretending like he's paying his employees with company (not his own) money.

2. Misclassifying Employees as Independent Contractors

Treating an employee as an independent contractor, when they should, in fact, be legally considered an employee, is one of the most costly mistakes a startup can make. Employers do it because they don’t have to pay taxes, insurance or overtime to independent contractors. They also don’t have to offer contractors benefits.

3. Trying to Manage Payroll and Compliance

Payroll is so hard to do, and business screw it up so often, that the IRS penalizes about 1 in 3 business for payroll mistakes. The complexity of managing quarterly tax withholdings at the local, state and federal level.... it easily adds up to a full-time job, even for a business with just a couple of employees. That’s why most businesses use a payroll service.

4. Overpaying for Healthcare and Benefits

Startup competition is fierce these days. If you want to attract top tier talent, especially developers, you’ve got to offer excellent benefits, particularly with healthcare.

5. Frustrating Employees with Endless Paperwork and Confusing Software

Nobody likes paperwork, especially not fast-moving startups. Yet many businesses continue to use outmoded HR processes and legacy software. Stop the madness!

Better try HRMantra to avoid all these problems!!

The following are the major features of the HRMantra Human Capital Management software.

1. Human Resourse Management
2. Attendance Management
3. Leave Management
4. Claim & Helpdesk Management
5. Payroll Management
6. Performance Management System
7. Learning Management
8. Recruitment Management
9. Project Management

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