Startups use payroll software not only to ensure their growing teams receive accurate, reliable pay, but also as an essential growth tool. Because startups grow so quickly, their needs in payroll software may be different from the needs of other businesses or enterprises. For example, startups often hire lots of new people very quickly. A payroll software solution with slow onboarding or a limited footprint may not be able to handle a startup’s needs, causing the company to miss out on key talent.

In the era of remote work, many startups are turning to international hires to fill key roles. In these situations, traditional payroll service providers typically cannot help, leaving startups frustrated while they burn cash waiting for the right hire. An employer of record, or EOR, can allow a startup to hire employees in any number of countries, freeing founders from the restrictions of slower payroll services.

Startups can even find special deals on payroll software if they look in the right places. Many payroll providers offer unique discounts for startups to help them grow.

In most cases, startups cannot run their own payroll for a local team, let alone payroll for a remote team with workers in multiple countries. Managing payroll manually might work for a short time and a small team, but as the company grows, it does not make sense for the leadership team to spend time managing the details of payroll administration. Payroll is a tricky process that can take a long time to complete without the assistance of outside help. Even for the smallest teams, outsourced payroll usually makes good financial sense.

In short: because not outsourcing HR services is more expensive for startups. Small, quickly growing companies cannot spare the resources or the time necessary to manage every HR function in house. This is not to say startups should not have HR teams — on the contrary, great HR leaders are invaluable for startups looking to scale past a certain point. However, building an entire HR team to handle payroll, benefits, taxes, compliance, and stock options does not make financial or operational sense, especially when services exist to handle all of these tasks for startups specifically.

Even the largest enterprises outsource many of their HR services. Want to hire someone in a new country? An employer of record is a type of outsourced HR that can help. Need to run a compensation review? There are companies and resources for that, too. For startups, where every resource is best dedicated toward the company’s central mission, outsourcing HR services is the most sensible course of action.

Outsourcing payroll allows startups to save time, conserve budget for more mission-critical uses, and ensure that everyone who works for the company has a great experience. Nothing can kill a team’s momentum like a round of missed payroll or benefits that don’t actually work. As much as startup employees want to build something great, they also want to be paid on time, access their health insurance, save for retirement, and take time off. Keeping these functions in house not only takes up valuable time for startup leaders, but can even create animosity between team members and the leadership team if something goes wrong.

By outsourcing payroll, startups can offload a time-consuming and sensitive process while greatly reducing the number of errors and frustrations employees experience. Which is more likely to succeed: a team of people who are constantly battling to get their salary payments corrected, or a team of people who can rely on regular deposits and are free to focus on the startup’s core goals?

Of course, every company and situation is unique. That’s why it’s important for startups to consider all the reasons to outsource payroll before deciding on a course of action or specific provider.

Startups face different payroll challenges than small businesses do. Startups tend to grow quickly and in spurts, especially after new rounds of funding. A startup’s core focus may even pivot from one product or service area to a new one, leading the company to consider a whole new range of hires than previously anticipated. Small businesses grow too, of course, but they do not face the same unpredictability that startups deal with, especially in early phases of growth.

Startups and small businesses both need payroll that is reliable, but startups also need more flexibility and speed. An established small business may be able to wait a long time to fill a key role, but for a startup, every week that goes by without a key position filled is a week with slower growth and more cash burn. Because of this, startups need to be able to onboard new people quickly, even when those people come with unusual challenges — for example, international hires. A startup handling payroll in house does not have the legal resources or the infrastructure to handle international hiring. But, by working with a payroll service provider with startups in mind, growing businesses can bring in the talent they need quickly, easily, and affordably.

Payroll services for startups vary in cost, but there are several ways startups can minimize expense while maximizing growth. First, startups should see if there are any payroll providers offering special discounts for startups. These discounts might include onboarding a certain number of employees for a free or reduced rate, as well as additional services, like help managing an employee stock options plan.

When the time comes to compare payroll service providers, startups should prioritize transparency in pricing. Most startups can’t afford to pay hefty deposits. They also require predictable expenses, which means payroll services that have hidden fees or charge a percentage of employee salaries are not ideal for startups. Remote’s Fair Price Guarantee helps startups keep costs predictable by guaranteeing no hidden fees, or unpleasant surprises. For startups looking to hire workers in other countries, Remote offers low flat-rate pricing, making it easy for growing companies to scale their global teams.

An EOR, or employer of record, is a type of payroll service that allows startups to hire workers in other countries legally, quickly, and easily. However, not all EORs offer the same services or provide the same experience. Many older EORs charge exorbitant fees and cater exclusively to enterprise companies, giving startups the impression they cannot access global talent without paying high rates. Fortunately, that is not the case. EORs like Remote allow startups to access the same great global talent as the world’s largest companies at startup-friendly prices.

Price is not the only factor when evaluating EORs, however. Startups should also ask the following questions to ensure they work with the right EOR partner:

• Does this EOR actually own entities in other countries or just resell the services of a third-party provider?
• Can the EOR guarantee protection for the startup’s mission-critical intellectual property and invention rights?
• Does the EOR have the security features necessary to protect company and employee information?
• For startups offering equity to employees, can the EOR help manage that equity plan across international borders, including tax withholding?
• Can the EOR also handle international contractor management?
• Does the EOR charge extra for basic services like benefits administration?
• Are there any special discounts for startups available?