There are three main tiers of businesses in the United States: Small Businesses, Mid-Sized Businesses, and Enterprise Level Businesses.
Each category is typically determined by number of employees and/or annual revenue. Of course, the more your workforce grows, the greater and more complex your payroll needs become. Let’s walk through the unique payroll needs of each category.
Payroll for Small Businesses
What Constitutes a Small Business
Business size is often defined in one of two ways: by number of employees or by amount of revenue, or sometimes both. The Small Business Administration (SBA) defines a small business as a business with fewer than 500 employees.
However, some analysts define a small business as a company with fewer than 100 employees and/or less than $50 million in annual revenue.
Most businesses in the US are considered small businesses.
Payroll Needs That are Unique to Small Business
- A Simple, Budget-Friendly Payroll System: Even if you have a small number of employees, it’s good to use a payroll system. Small businesses can benefit from a system that allows electronic issuing of payroll, logging documents, classifying employees, and generating tax forms
- Time Tracking: Small businesses with hourly workers should utilize software that makes time tracking or logging hours worked to generate necessary compensation.
- Employee Classification and Compensation: You will need to classify your employees and ensure that you are abiding by labor laws and employee regulations. This means designating works appropriately as full time employees, part time employees, salary, hourly, or independent contractor.
- Payroll Taxes and Deductions: You will need to make sure you are paying the employer portion of payroll taxes on schedule, and that you are filing for any deductions correctly.
- Easy Reporting: You will need to generate reports to ensure you have the correct numbers for taxes, compensation, and to see your overall labor costs.
- Collaboration Options for Experts: Your payroll system should follow the standards procedures of payroll issuance so that your CPA or accountant can assist you with payroll process needs, setup, or tax filings. If you’re not sure what payroll system is best, ask your CPA or tax advisor.
Payroll for Mid-Sized Businesses
What Constitutes a Mid-Sized Businesses
There is no definitive official guide in the US for what defines a mid-sized business (also known as a mid-market enterprise), but most employment companies define a mid-sized business as a company with 50 to 250 employees.
Some analysts define a mid-sized business as a business with fewer than 1,000 employees and/or $50 million to just shy of $1 billion in revenue, though many will include businesses that have low employees but high revenue or vice versa on their lists.
Examples:
| Company | Number of Employees | Annual Revenue |
| SeatGeek | 500 | $125 Million |
| Elf Beauty | 339 | $448 Million |
| Highpeak Energy | 66 | $596 Million |
| MGP Ingredients | 672 | $758 Million |
Payroll Needs That Are Unique to Mid-Sized Businesses
- A Robust Payroll System: Mid-sized businesses need a payroll system that can handle growth and scale to meet the increasing number of employees and contractors.
- Diverse Pay Structures: Mid-size businesses often have a mixture of employees and contractors with varying pay structures and schedules (i.e. full time, part time, hourly, salary, independent). The payroll system should accommodate employee classification designation, benefits eligibility, bonuses, etc.
- Self-Service Portals: Your payroll system should offer a login to your employees where they can access pay stubs, submit paperwork, and download tax forms.
- Benefits Administration: Mid-sized businesses often offer multiple health insurance options, 401k, paid time off, etc. This data should be integrated with payroll so that benefits are administered accurately and errors are not made.
- Greater Focus on Compliance: Mid-size businesses must navigate employee classification regulations perfectly. It’s important to abide by all labor laws, which also means accurately tracking employee time, hours, and overtime if you have hourly employees.
- Reports: Your software must be able to provide reports and analytics, as these can give you insights into labor costs and become an important tool in budgeting and forecasting. These reports are also crucial for ensuring compliance with labor and tax laws.
- Payroll Tax Compliance: Payroll tax obligations may change as your company grows. Your pay schedule for payroll tax may change, and you must ensure you are withholding correctly.
Payroll for Enterprise Businesses
What Constitutes an Enterprise Business
Most analysts and analysts define a large business (often referred to as an enterprise) as an organization with 1,000 or more employees, typically with more than $1 billion in annual revenue.
Examples:
| Company | Number of Employees | Annual Revenue |
| Walmart | 2,100,000 | $611 billion |
| Amazon | 1,541,000 | $513 billion |
| Exxon Mobil | 62,000 | $413 billion |
| Apple | 164,000 | $394 billion |
Payroll Needs That Are Unique to a Large Business
- Multi-State and International Payroll: Enterprise businesses will often have a large workforce across multiple states and sometimes countries. This means the payroll software and process should be designed to handle large amounts of data and the ability to issue payroll accurately. These complex payroll setups need to have automatic checks and balances, and whoever is managing payroll should have a robust understanding of navigating payroll laws, employee regulations, and reporting needs across jurisdictions.
- Timekeeping Systems (often integrated with HR suites): Though not all businesses require timekeeping, those that do will need a timekeeping platform integrated into their payroll and HR services. An all-in-one solution will streamline employee and payroll management.
- Diverse Pay Structures: Large enterprises often have multiple employees and contractors working with different pay schedules and structures.
- Benefits Administration: Also typically integrated into the HR software, with a large workforce you’ll need a system that can handle health insurance, retirement plans, spending accounts, stock options, and other benefits.
- Executive Compensation and Equity Plans: Executive compensation packages, stock options, and performance-based incentives are all typical of the payroll needs for large systems
- Payroll Security and Data Privacy: Every business must ensure that their employee and contractor data is safe, secure, and private. Larger companies typically take this a step further, by ensuring access controls, data encryption, and regular risk assessments to protect sensitive information.
- Analytics and Reports: Most large businesses require regular reports on compensation and labor costs. This data is often used to make hiring decisions, for budgeting and forecasting, and for ensuring compliance.
