Your Step-by-Step Guide to Setting Up Payroll for Your Cannabis Business

Hey there, future cannabis mogul! Ready to dive into the world of cannabis and set up payroll for your new venture? Don’t worry, we’ve got your back. Setting up payroll might sound daunting, but together, we’ll make it a breeze.

We’ll guide you through every step of the process, from understanding regulatory requirements to choosing the right payroll solutions for your business. Our expertise will ensure you navigate the complexities with ease, allowing you to focus on what you do best—growing your business and making your mark in the cannabis industry.

Whether you're a new licensee or an established business ready to scale up, we understand how crucial it is to partner with a reliable payroll provider. Your choice will significantly impact your business’s success, reputation, and company culture.

A dependable payroll provider ensures that your employees are paid accurately and on time, which fosters trust and morale. It also helps maintain compliance with industry regulations, reducing the risk of costly penalties and legal issues. By choosing a provider that aligns with your business needs, you create a solid foundation for operational efficiency and long-term growth. Together, we’ll make sure you have the support you need to thrive in the competitive cannabis market.

A dependable payroll partner brings peace of mind to compliance, HR, payroll, and employee engagement. Let’s break it down step-by-step, so you can focus on growing your business.

Setting up Payroll in 7 Steps

Below are seven steps more companies follow to get their payroll set up properly. Keep in mind, your situation might be unique, so it could look a little different. If you’re feeling lost, reach out to us.

Step 1: Gather Your Essentials

First things first, let's get some key information together. If you’ve already started paying your employees, grab those details for your payroll provider. If you’re just getting started, here’s what you’ll need for each employee:

• Completed W-4 forms
• Online access to employee records
• Home addresses (this affects tax withholdings)

We know this data is sensitive, so make sure you’re working with a business you trust.

Step 2: Get Those Tax IDs

Next up, we need to tackle those tax IDs. Depending on your state, you’ll need state withholding and unemployment tax IDs. It might sound tricky, but most states allow you to apply online. Typically, the application process is straightforward and can be completed in a few days, although processing times may vary depending on the state.

Step 3: Register Your Business

By now, you’ve probably incorporated your business and received your federal employer identification number (EIN). If not, now is the time to get it. Your EIN is like your business’s social security number—essential for all things payroll-related. The process to obtain an EIN is typically quick; you can apply online through the IRS website and receive your number almost immediately.

Step 4: Decide on a Pay Schedule

Now, let’s talk about how often you want to pay your employees. Weekly? Bi-weekly? Monthly? This decision depends a lot on your cash flow. You’ll want to make sure you have enough funds to cover salaries and payroll taxes each pay period.

Step 5: Cannabis Licensing

Since you’re in the cannabis industry, there’s an extra layer of compliance to consider. You’ll need your state cannabis licenses in place before starting payroll processing. This is crucial because our banking partners require proof of active cannabis licenses to work with you.

Additionally, ensure that all your licenses are current and that you stay updated with any changes in state regulations. This will help you avoid disruptions and maintain smooth operations. Keeping your licensing up to date also supports seamless integration with financial institutions and ensures compliance with industry standards.

Step 6: Onboard Your Employees

It’s time to get your employees into the system! This means entering their information into our payroll system, including addresses, tax withholding preferences, and direct deposit details. You’ll be inputting data such as:

• Personal Information: Full name, address, and Social Security number
• Tax Withholding Preferences: W-4 details for federal tax withholding and any state-specific forms
• Direct Deposit Information: Bank account details for salary deposits

We’ll also need to keep a record of your cannabis licenses on file to ensure everything is compliant and ready to go. This step is crucial for maintaining regulatory compliance and ensuring that payroll processing runs smoothly from day one.

Step 7: Payroll Processing

Once everything’s set up, a professional payroll provider will accurately take care of the ongoing payroll processing. This means calculating wages, deducting taxes, and making sure everyone gets paid on time. They’ll also handle tax filings and payments to keep you compliant with all federal and state regulations. 

Easy peasy, right? Well… sort of. Please remember, the experience will only be smooth if you choose a quality provider. Here’s what a reliable provider should do for each step:

• Incorporation and EIN Setup:

• • Provider’s Role: Guide you through the process of obtaining and using your EIN, ensuring all forms are correctly completed and submitted.

• State Tax IDs and Licenses:

• • Provider’s Role: Assist in applying for state withholding and unemployment tax IDs, and ensure that all required state cannabis licenses are in place and compliant.

• Employee Information Setup:

• • Provider’s Role: Help input and securely manage employee data, including addresses, tax preferences, and direct deposit details, ensuring accuracy and confidentiality.

• Compliance and Documentation:

• Provider’s Role: Maintain up-to-date records of your cannabis licenses and other necessary compliance documentation, keeping everything aligned with regulatory requirements.

Let’s dive into some key considerations for selecting the right payroll provider. Even if you don’t choose Paragon, we want to help you identify progressive and reliable companies that meet your needs.

What to Look for in a Reliable Cannabis Payroll Company

Choosing the right payroll provider is crucial to the success and compliance of your cannabis business. The right partner can simplify payroll processes, ensure compliance, and offer valuable support. Here’s what to look for in a reliable payroll company:

Key Qualities of a Reliable Payroll Company

1. Cannabis Industry Experience: Ensure the payroll provider has experience working with cannabis businesses. This industry has unique challenges and compliance requirements, and a knowledgeable provider will be better equipped to handle them.
   
   
2. Comprehensive Compliance: The payroll company should be able to manage all aspects of compliance, including tax filings, cannabis-specific regulations, and up-to-date tax tables. This is essential for avoiding legal issues and penalties.
   
   
3. Strong Banking Partnerships: Look for a provider with strong, cannabis-friendly banking partnerships. This ensures you have reliable banking options and can avoid disruptions if banking regulations change.
   
   
4. Real Human Support: Having a support team is crucial. You need real human support, not just chat bots or ticketing systems. This is especially important in the cannabis industry, where issues can be complex and time-sensitive. Our dedicated team will be your advocates, protectors, and doers along your journey, giving you peace of mind.
   
   
5. Scalability: Choose a provider that can scale with your business. Whether you’re opening new locations or increasing your employee count, the payroll system should accommodate your growth seamlessly.
   
   
6. Ease of Use: The payroll software should be user-friendly and intuitive. This reduces the learning curve and ensures that you can manage payroll efficiently without extensive training.
   
   
7. Data Security: Ensure that the provider has robust data security measures in place to protect sensitive employee and business information.

Questions to Ask a Potential Payroll Provider

1. Experience with Cannabis Businesses:
   • How long have you been working with cannabis businesses?
2. Compliance and Regulation:
   • How do you ensure compliance with state and federal regulations?
3. Banking Partnerships:
   • Do you have partnerships with cannabis-friendly banks?
4. Support and Customer Service:
   • What kind of support do you offer? Is it 24/7? Is it human support?
5. Scalability:
   • Can your system handle my business as it grows?
6. Data Security:
   • What measures do you take to ensure the security of my data?
7. Ease of Use and Implementation:
   • What kind of training and onboarding do you provide?
8. Cost and Value:
   • What are your pricing plans? Are there any hidden fees?

Is Setting Up Payroll for Cannabis Businesses the Same as Other Businesses?

Not quite! Navigating the unique landscape of the cannabis industry can be challenging, especially when it comes to employee benefits. Many major 401(k) providers shy away from working with cannabis companies, leaving you at a disadvantage.

Fortunately, Paragon Payroll is here to bridge that gap. We’ve built strong relationships with banks and retirement service providers that are friendly to the cannabis industry. This allows us to offer competitive benefits packages that give you a significant edge in recruiting top talent, maintaining employee engagement, and enhancing retention.

With Paragon Payroll, you’ll provide your team with healthy pathways for upward mobility, supporting their journey from hire to retire. Let us help you turn these challenges into opportunities for growth and success.

How Paragon Payroll Handles Your Cannabis Payroll Needs

We understand how overwhelming the steps to setting up payroll can feel. That's why we have a dedicated team that will be your advocates, protectors, and doers along your journey. Here's how we handle it:

Personalized Setup Process

• Customized Consultation: We start with a detailed consultation to understand your specific needs and address any concerns. This allows us to provide tailored solutions that fit your business perfectly.
• Gather Necessary Information: We help you compile all the essential documents and information needed for a smooth setup, including employee details, tax IDs, and cannabis licenses.
• Implementation Plan: Our team creates a step-by-step implementation plan to get your payroll system up and running. This includes timelines, milestones, and key deliverables to ensure everything is on track.

Ongoing Support and Compliance

• Training and Support: We provide comprehensive training to ensure you’re comfortable using our system. Our team will be with you every step of the way, offering ongoing support and guidance.
• Compliance Check: We review your compliance requirements and ensure all necessary licenses and documents are in order. Our goal is to make sure you’re fully compliant with all regulations.
• Continuous Updates: Our system is designed to keep up with ever-changing tax regulations. We ensure your payroll is always accurate and compliant, so you can focus on growing your business.

Reliable Banking Partnerships and Competitive Benefits

• Banking Partnerships: We introduce you to our network of cannabis-friendly banking partners. This ensures you have reliable banking options to support your payroll and financial needs.
• Competitive Benefits Packages: We help you explore options for offering competitive benefits packages to your employees. This includes working with industry-friendly retirement service providers.

Ready to Take the Next Step?

Feeling inspired? Awesome! The next step is to vet a few providers and choose which one you align with most. If we are included in your search, here’s what you can expect when you reach out to Paragon Payroll:

1. Prepare for Your Consultation: Gather any documents or information that you can from the documents listed above. Don’t fret if you have any trouble, that’s why we’re here to help.
2. Reach Out to Us: Give us a call at (866) 444-4615. We’re here to help and answer any initial questions you might have.
3. Schedule a Demo: Book a time that works for you, our team will assess what your needs are and we’ll set up a demo to showcase our payroll and HR system to see if you feel like it’s a good fit.
   
   

Join Our Community: If you choose Paragon Payroll, you’re not just getting a service – you’re joining a community of cannabis businesses dedicated to compliance and excellence. We’re excited to be part of your journey. Let’s grow better, together!