How Do Startups Pay Their Employees?
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How Do Startups Pay Their Employees?

A startup has several challenges and one of them could be attracting employees, especially if money is tight as the company grows.
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Starting a business isn’t easy and one of the many challenges is figuring out how to compensate your employees, beyond W2s and 1099s. The top talent that is highly needed to elevate your business does not come cheap and everyone wants to 'get bread'. So here comes the million-dollar question…how do you pay your employees and make their efforts worth the while without going broke?

Money falling from the sky
Photo Credit: GIPHY Cam

Offer Stocks or Profit Sharing

Anyone who believes your company will take off and be successful (if they don’t, yikes! Lose them) would most likely accept stocks/profit sharing  to complement their low pay.

Ensure that there’s a one-year cliff vesting  - or a few more years to allow your company to grow. This will ensure new employees won’t just sign on for the stocks and leave afterward. Make sure to investigate the businesses that can offer this option, as it is not the case for all companies. 

Milestone Pay

Paying per performance is a way to ease the pressure off you and drive high performance. Negotiate and determine what is achievable so that you don’t set them/yourself up for failure.

Offer commission pay, bonuses and other incentives based on targets achieved such as exceeding sales numbers, double/triple lead conversions, website/app launches, successful fund-raising, etc. and I bet you, your remarkable employees would be excited because they will be confident that they can deliver.


Hire promising college students/graduates who are talented and most likely still new and working on building experience and happy to join your company to make an impact and grow at an affordable cost to you as interns or freelancers/independent contractors i.e.

Pangea is a great platform full of talented students/graduates for you to choose from. Contracting freelancers/independent contractors are also helpful because you do not have to pay cash regularly e.g., Salespeople paid on commission only, freelancers paid for only the hours/deliverables met. Make sure you file the correct tax for the freelancers/independent contractors you hire to keep out of trouble.

Benefits & Growth

Other things are important to some employees (it is not always about just the money) and these include growth in the company, and benefits/incentives such as flexibility, remote work, company discounts, generous parental leave/vacation, training/development/mentorship, half-day Fridays during summer, etc. They all add up to a great compensation package that makes a difference.

Training/development/mentorship can be done by pairing senior employees with junior ones and/or connecting employees to industry experts for weekly coffees/lunches and workshops/talks. This is a great way for employees to grow via expanding their knowledge/network, learning new skills, etc. that they can use to grow your company.

Employee Appreciation written in purple and green
Photo Credit: Club AR

What is it they say? Happy employee, happy employer! (Lol, nobody ever says that, or do they?). Before you go bankrupt trying to pay your employees, make sure you explore your options on how to compensate them to keep both parties happy.