How do you recommend paying employees if your start-up is not generating revenue yet? We are a service-based start-up that is still in its seed stage.

I don't want to give away equity, but I do want to be fair. Should it be commission based? Stipend after all work is complete? Suggestions?


When taking on employees you have to be mindful of state labor laws. If they are sales people working on commission only then you might get away with this form of payment. However if they are providing you skilled labor then you maybe required to pay them minimum wage.

The bigger question should by, why would someone want to work for you with little or no pay? And who would trust the growth of their company with staff making little to no pay?

It's the old saying, you get what you pay for.

Without knowing too much about your company I would say that if you do not have revenue your not ready to hire. The free labor comes from founders (sweat equity).

I would be glad to speak with you further on the topic.
Best of luck.

Answered 9 years ago

That depends. Depending on the type of business you have, you could indeed pay on straight commission providing the commission is equal to or more than minimum wage for your state.

If the employees are not full time and pass the IRS test for "Independent Contractors" you could pay them in that fashion as well.

If they are true employees, they will be subject to Wage and Hour regulations so unless you have them engaged as a contractor, you would not be able to pay them on a piecemeal basis.

You should review these rules and regulations at the website for the Department of Labor:

Feel free to contact me for further assistance.

Answered 9 years ago

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