Payroll services for start-ups

A start-up’s payroll goes through three distinct phases – founders only, first hires, then scale – and the right answer is different at each stage. Buying the scale solution on day one wastes money; staying on spreadsheets past hire five risks compliance.

What makes start-ups payroll different

• Founder-only stage. A director-only payroll (often a small salary topped up with dividends) can run on free software in minutes a month – see the software costs guide.
• First employees. Auto-enrolment duties start with employee number one. Pension setup, statutory pay and RTI penalties make this the point where most founders outsource – typically £25 – £60 a month for a five-person team.
• Equity and EMI options. Option exercises and RSUs create PAYE events most basic bureaus have never processed; ask before you need it.
• Investor-grade reporting. Headcount cost projections matter for runway. The employer cost calculator shows the true loaded cost of each hire – typically salary plus 18 to 25 percent.

What to look for in a provider

Modern hybrid platforms (PayFit and similar) suit 5-50 person start-ups: software speed with expert backup. Ensure pricing is monthly-rolling, not annual lock-in, while headcount is volatile.

Pricing follows the wider market – see what outsourcing costs (£4 – £10 per employee per month fully managed) – but sector add-ons matter more than the headline rate, so always compare like-for-like quotes.