5 Common Challenges and Their Solutions
If you created a startup company in 2021, numbers say that only 80% your competition survived after one year. The startup journey is full of challenges as there are multiple moving parts to keep track of, from attracting and retaining talent to managing cash flow and keeping up with tax. This article shows how payroll can help.
Despite payroll management being a core business function, startup companies often struggle keep everybody on the payroll happy while saving as much as possible.
When launching a new company, you may aim to grow and reach your financial targets with a talented team that builds prosperous customer and client relationships.
Although MASA typically handles payroll for medium to large companies, we have also worked with growing startups who contact us for support with their payroll. Read on as we explore five payroll challenges for startups and solutions to help you overcome them.
One of the biggest challenges for startups is managing costs. Startups must be mindful of their burn rate and often need to operate on a lean budget. Investing in the best payroll solution as early as possible can help startup leaders meet financial targets and save money.
There are a few ways to manage costs when it comes to payroll:
- Use a payroll provider that offers a tailored solution. You only pay for the services you use.
- Your payroll solution should help manage cash flow and keep costs down
- Outsourced payroll is a cost-effective solution that allows startups to access personalised, world-class service
The second payroll challenge to highlight for startups is compliance. Startups need to be aware of the compliance landscape and ensure they are up to date with the latest regulations.
This can be a daunting task as the compliance landscape is constantly changing. Errors in this domain can be costly and time-consuming, making payroll compliance a critical factor for the safety and longevity of startup companies.
Here are two well-tested solutions startups can implement to limit the
pain and risks of payroll compliance:
- Use a payroll provider that offers compliance support. This means they will keep track of the latest compliance developments and ensure your payroll is compliant.
- Know every piece of documentation that you need to complete and submit for payroll, especially tax-related documents
- Outsource payroll to a provider specialising in compliance and handling the costs associated with legal/compliance issues. Your team can gain peace of mind knowing that payments, Tax, UIF and other essentials are in reliable hands.
3. Complexity of the payroll system
We live in a digital age where aspiring entrepreneurs can begin new ventures from the phone in their pocket. One Google search brings up countless payroll software and systems. Where do you start?
- Find a payroll provider that offers a cloud solution. This means they can help you manage payroll for multiple entities and locations.
- Another solution is to partner with an outsourced payroll provider specialising in payroll. This can remove your team’s burden and ensure your payroll is managed correctly.
Another challenge for startups is growth. Startups often struggle to grow in the early stages. This can be a challenge when it comes to payroll as you need to be able to scale quickly.
- One solution is to use a payroll provider that offers a scalable solution. They should build a solution that helps your startup grow and scale to meet financial goals.
- Outsourcing to a specialist that can manage your payroll takes the burden off your team and allows you to focus on other aspects of your business.
4. Payroll Integration
When it comes to payroll, startups need to be able to integrate their systems. This can be a challenge if you have multiple systems that are not compatible. You should be able to track your payroll process from end to end with a complete overview of the entire payroll lifecycle.
- Use a payroll provider that offers an API. You can integrate your systems and connect them to your accounting system.
- Partner with a payroll provider that offers a ready-made solution. This can save you time and money as you don’t have to build an integration from the ground up.
Security is one of most startup companies’ most critical and often overlooked challenges. Although every organisation in this modern era should be protecting their data, there are a dangerous number of payroll systems that are not secure.
This lack of security leaves highly valuable and sensitive company data vulnerable to security breaches. Startups can become victims of fraud and theft, which can result in revenue loss, reputational damage, and even lawsuits.
- One solution is to use a payroll provider that offers a secure solution. This means they have the necessary security measures to protect your data, such as encryption and authentication procedures.
- Another solution is to use a payroll provider that offers a cloud-based solution. This can give you peace of mind, knowing your data is stored off-site and is less vulnerable to security breaches.
There is so much more that goes into payroll security. You can check out this blog post on 5 Tips and Tricks for Safeguarding Your Data to get the full scope!
There are several challenges that startups face regarding payroll. However, there are also many ways to empower your management team and employees with solid payroll solutions:
Outsource your payroll to an experienced specialist that offers a custom solution for your startup company. Measured Ability (MASA) offers among the best payroll solutions in South Africa, with over 12,000 monthly transactions under our belt and happy clients across the country!
We understand that every business is different and offer a range of services we can tailor to meet your needs. By leveraging a custom-made solution, your company can ensure that it is getting the most efficient and effective payroll service possible.