Cash in an envelope is the expensive way to pay someone
Most first-time owners start by paying a helper in cash. It feels simpler and it is, right up until it is not. Cash wages cannot be deducted as an expense without a record, which means you pay tax on money you did not keep. Workers paid off the books are not covered the way employees are, which becomes your problem if someone gets hurt. And calling an employee a contractor when the law would call them an employee is one of the more expensive mistakes a small business can make, because back taxes and penalties are assessed against the business.
None of this is a reason to panic. It is a reason to set it up properly once and then stop thinking about it.
What we run for you
We set up payroll, register the state withholding and unemployment accounts you need, and run the pay cycle you choose. Taxes are withheld, deposited and filed on schedule. Your people get paid on the same day every time, which matters more for keeping a good crew than most owners expect.
We also sort out who is an employee and who is genuinely a contractor, and we document the distinction. Contractors get 1099s at year end; employees get W-2s. The HR side — offer letters, handbook, new-hire packets — is set up at the same time so the paperwork matches the payroll.
Sales tax, where it applies
Whether a service business owes sales tax depends on the state and on what you sell. Labour is treated differently from materials in most places, and some states tax certain services outright. We work out what applies to your trade, register the account, and file the returns on the schedule your state sets — monthly, quarterly or annually.
Sales tax collected is not your money. It is the state's money you are holding, and the penalties for spending it are steep. Keeping it separate and filed on time is a small discipline that avoids a large problem.
Signs you need this
- You pay a helper in cash and deduct nothing.
- Everyone who works for you is called a contractor.
- You are not sure whether you should be collecting sales tax.
- Payroll tax deposit dates are something you find out about late.
- You want to pay yourself properly and do not know how.
- You are about to hire your first employee.
If two or more of these sound familiar, take the free business checkup — ten questions, two minutes, and you get the list of gaps either way.
How it works
Classify
We look at how the work actually happens and determine who is an employee and who is genuinely a contractor, then document it.
Register
State withholding, unemployment and sales tax accounts opened where your situation needs them.
Run
Payroll on your chosen cycle, taxes withheld and deposited, people paid on the same day every time.
File
Payroll tax filings, sales tax returns, and W-2s and 1099s at year end.
What is included
- Payroll setup and state account registration
- Payroll run for up to 5 employees (published rate per employee above that)
- Payroll tax withholding, deposits and filings
- Employee vs. contractor classification, documented
- Sales tax registration and return filing where it applies
- W-2s and 1099s issued at year end
All of this sits inside one package — the Whitelow Launch + Back Office Partnership — rather than being quoted as a separate service.
Who it is for
- Businesses with their first one to five employees
- Owners currently paying helpers in cash
- Trades where materials may be taxable even if labour is not
- Anyone considering an S-corp election and a reasonable owner salary
What affects the price
Whitelow sells one package with two ways to pay: $2,497 one-time plus $597 a month, or $0 up front in exchange for a 15% stake in the LLC. Government fees and your QuickBooks subscription are passed through at cost on both. These are the factors that move what this piece of the work involves:
| Factor | Why it matters |
|---|---|
| Headcount | Up to five employees is included; above that there is a published per-employee monthly rate. |
| Pay frequency | Weekly cycles mean more runs and more deposit dates than semi-monthly or monthly. |
| States involved | Employees in more than one state means more registrations and more filings. |
| Sales tax | Filing frequency is set by your state — monthly, quarterly or annual — based on your volume. |
See both payment options side by side, including what each one costs in year one.
Frequently asked questions
When do I have to put someone on payroll instead of paying cash?
As soon as you are directing how and when someone does the work, they are almost certainly an employee rather than a contractor, regardless of what you both agreed verbally. The test is about control, not about the size of the cheque. We look at your actual arrangement and tell you which it is.
Can I pay myself through payroll?
It depends on how your LLC is taxed. A single-member LLC taxed as a sole proprietorship normally takes owner draws, not a paycheck. An LLC that has elected S-corp treatment usually must pay the owner a reasonable salary through payroll. That election has real tax consequences in both directions, so we walk through it with you and your CPA rather than deciding it for you.
Do service businesses charge sales tax?
It varies by state and by what exactly you are selling. Materials are commonly taxable even where labour is not, and a handful of states tax specific services directly. We determine what applies to your trade in your state and register the account if you need one.
What does payroll cost on top of the partnership?
Payroll for up to five employees is included. Beyond five, there is a published per-employee monthly rate so the cost is predictable as you grow. See pricing for the figures.
What happens if I have been paying people in cash?
We get it onto the books going forward and tell you honestly what the exposure is for what has already happened. It is not a conversation anyone enjoys, but it is a much smaller problem now than it is after a claim or an audit.
Should my LLC elect S-corp status?
Sometimes, and sometimes it costs you more than it saves. It depends on your profit level, how much you pay yourself and your state. We model it with you and your CPA rather than applying a rule of thumb, because the election is not free to make or to undo.