Is Payroll Just Wiring Someone Money?

Tomer London says payroll is not just wiring someone money, and doing that is illegal. Payroll means a proper W-2 at the end of the year, the employer withholding taxes, paying government agencies at the right time, and filing at the right time.

Someone could calculate the numbers in a spreadsheet, print the forms, and fax the IRS, then do the same for every state agency where employees work. One employee in New York or Washington State may mean four different agencies to report to on a quarterly basis and an annual basis, with payments sometimes on a weekly basis depending on the pay schedule. It gets complicated fast in the US, which is why payroll companies existed. The founders did not invent them.

The hours in a coffee shop were only to set payroll up. His co-founder, trying to pay himself and the other founders at a previous company, found a website where you could only call. A salesperson in a suit then met him in a neighborhood coffee shop with a briefcase and a big stack of paperwork. The co-founder does not drink coffee, so the rep bought a hot cocoa, and they sat for hours. You cannot pay someone on the spot. The paperwork goes to headquarters and takes a couple of weeks. Every later payroll meant calling in the hours, or faxing the timesheet.