You didn't start a company to become a payroll expert. Yet here you are, Googling tax deadlines at midnight, wondering if you registered for unemployment insurance in the right state, and praying that the 1099 you filed last quarter was actually correct.
You're not alone. The Department of Labor recovered more than $273 million in back wages and damages in fiscal year 2024, helping nearly 152,000 workers who weren't paid correctly. And according to Ernst & Young research, companies make an average of 15 payroll corrections per pay period, with each error costing about $291 to fix. That adds up fast.
The good news? Modern payroll platforms can cut error rates significantly. Research from McKinsey suggests AI-driven payroll software improves accuracy by around 20%, while G2's analysis found that businesses using payroll software see 31% fewer errors and 70% fewer compliance issues. The challenge is choosing the right platform for where your startup is today and where it's headed.
We evaluated the five payroll platforms most popular with venture-backed startups. Here's what actually matters when you're building fast.
What Early-Stage Founders Actually Need from Payroll
Before comparing platforms, it helps to understand what separates startup payroll needs from, say, a local restaurant or an enterprise with an HR department.
You're probably hiring across state lines. According to Gusto's research, 60% of companies now have at least one employee living more than 100 miles away, up from 50% in 2021. Remote work changed everything. That means dealing with different tax rates, registration requirements, and filing deadlines in every state where someone works.
You don't have an HR team (and shouldn't need one yet). At the seed and Series A stage, the founder or a single ops person handles everything. Your payroll solution needs to work without specialized knowledge.
Compliance mistakes are expensive and distracting. A single misclassified contractor or missed state registration can spiral into weeks of back-and-forth with agencies. That's time you should be spending on product and customers.
You'll outgrow basic solutions quickly. The platform that works at 5 employees may break down at 50. Switching payroll providers mid-growth is painful, so it's worth thinking one stage ahead.
The 5 Platforms Founders Actually Use
1. Warp: Best for Startups Who Want Compliance on Autopilot
The pitch: An AI-native platform built specifically for startups, where compliance happens automatically in the background.
Why founders like it: Warp was built by YC founders who experienced the pain of scaling payroll firsthand. The platform uses AI agents to handle the tasks that trip up most startups: automatically registering your company for state taxes when you hire in a new state, filing quarterly returns, and resolving tax notices on your behalf.
The setup takes about ten minutes. Founders describe it as "Stripe for payroll," which captures both the developer-friendly design and the philosophy that infrastructure should just work.
Who it's for: Seed to Series C startups with distributed teams who want to stop thinking about compliance entirely. AI-native employee management built for ambitious, fast-growing companies.
2. Gusto: For Single-State Startups Getting Started
The pitch: The approachable, affordable option that's been the default for small businesses since 2011.
Why founders like it: Gusto has a large ecosystem in SMB payroll, with integrations across most startup-friendly accounting firms. The interface is genuinely intuitive. You can run payroll in minutes without reading documentation.
Who it's for: Early-stage startups with employees primarily in one state, or small business owners.
The tradeoff: Multi-state compliance requires their Plus plan, and even then, some state registrations aren't fully automated. You may need to handle those manually or hire a service.
3. Rippling: For Enterprise Companies That Need Everything in One Place
The pitch: A unified platform combining HR, IT, and finance. Employee onboarding includes payroll, devices, and app access in one workflow.
Why founders like it: Rippling solves a different problem than pure payroll platforms. When you hire someone, you probably also need to ship them a laptop, provision their email, add them to Slack, and set up their benefits. Rippling handles all of this from a single system.
Who it's for: Series C and beyond, or any company where managing devices, apps, and HR from separate systems has become painful. For companies that need enterprise-grade controls.
The tradeoff: Pricing requires a sales conversation, and the full platform is more than most seed-stage startups need. Implementation typically takes 2-8 weeks depending on complexity.
4. Deel: For Global-First and Remote Teams
The pitch: Hire anyone, anywhere, with built-in compliance for 150+ countries.
Why founders like it: Deel became essential during the remote work boom by solving international hiring. Need to bring on a developer in Portugal or a designer in Argentina? Deel acts as the Employer of Record, handling local labor laws, contracts, and payments so you don't need to set up foreign entities.
Who it's for: Companies building distributed teams across borders, or anyone who needs to pay international contractors without the headaches.
The tradeoff: If you're US-only, Deel's pricing is steep compared to domestic alternatives. The platform is optimized for global complexity startup founders may not need yet.
5. Justworks: For Startups That Want Enterprise Benefits
The pitch: A Professional Employer Organization (PEO) that gives small startups access to big-company benefits.
Why founders like it: Justworks uses a co-employment model where they technically become your employees' employer of record. The benefit? They pool thousands of workers to negotiate health insurance, 401(k), and workers' comp rates that startups couldn't access independently.
Who it's for: Startups competing for talent against larger companies, where offering strong benefits packages matters for recruiting.
The tradeoff: The PEO model means higher per-employee costs ($79-109/employee/month) and less flexibility. Some companies find benefits costs increase significantly after the first year. You're also giving up some control over the employer relationship.
Why Payroll Automation Isn't the Risk You Think It Is
A common concern we hear: "Is it safe to trust automation with something as critical as payroll?"
It's a fair question, but it reflects a misunderstanding of how modern payroll platforms work. They're not making judgment calls about how much to pay people or whether to approve expense reports. They're automating rule-based calculations and compliance tasks that have clear right answers: tax rates, filing deadlines, form requirements.
This is exactly the kind of work where automation outperforms humans. An Ernst & Young study found that payroll employees at the average 1,000-employee organization spends an aggregate of 29 workweeks fixing the most common payroll errors. That's more than half a year spent fixing mistakes rather than preventing them.
Multi-state compliance makes this exponentially harder. G2's research shows that 58% of businesses have evaluated their remote working policies' impact on multi-jurisdictional payroll compliance. Keeping track of changing tax rates, new local requirements, and filing deadlines across jurisdictions is exactly the kind of task where humans make mistakes and software excels.
The real risk isn't using automation. It's trying to manage compliance manually while you're also building a product, closing customers, and raising funding.
The Bottom Line
Payroll is one of those problems that seems simple until it isn't. The platform that works perfectly at 5 employees can become a liability at 50. State tax registrations, compliance filings, and contractor payments compound in complexity as you grow.
The founders we spoke with consistently said the same thing: they wish they'd thought about payroll infrastructure earlier, the way they think about their tech stack. The switching costs are real, and the compliance risks are higher than most people realize.
The platforms on this list have all earned their place in the startup ecosystem. Your job is to pick the one that matches where you are now and gives you room to grow.
Building a startup and want to skip the payroll headaches? Warp was built by YC founders specifically for fast-growing startups. Set up in 5 minutes, with AI-powered compliance that actually works. Set up a demo today.
