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All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
All-in-one HR platform · v2.0
14-day free trial · No credit cardhello@HrMagix.com
Founders and first HR hires, roughly 10 to 100 people
Early-stage companies rarely fail at HR because their tools are bad. They fail because nothing has been decided, and every undecided rule becomes a precedent the first time someone asks.
HR software for startups is bought later than it should be, and for a predictable reason. At fifteen people, HR is a founder answering questions in a chat window. It works, and it works precisely because everyone can see everyone. The failure mode arrives at around forty, when the first person asks a question whose answer was previously improvised, how much notice do I owe, does a Friday off cost me two days, when does my leave reset, and discovers that the answer depends on who they asked and when.
By then the decision has already been made, badly, several times. Founders usually reach for HR software at this point believing they need a tool. What they actually need is for the rules to exist somewhere other than in their head, applied identically to everyone, from the day they are written.
A funding round closes, and a hiring plan arrives with it before any HR process exists.
Due diligence asks for appointment letters, statutory filings and salary records as they stood at the time.
The first engineer's salary crosses the income-tax exemption limit and TDS becomes a monthly obligation.
Not a feature gap, the specific operational pressures this kind of company runs into, and why each one resists a spreadsheet.
EPF and ESI applicability, Professional Tax registration in the states you operate in, and TDS under Section 192 are not things that begin at a headcount milestone you will notice. Setting the platform up with the right identifiers and rates from the first employee costs nothing; retrofitting them across eighteen months of history is a genuine project.
A leave request granted generously once is a rule from then on. Writing the leave scheme, the notice period, the probation length and the work-from-home position down, and having the system apply them, is what stops the founder becoming the appeals process.
Almost every HR question a small team generates is a lookup: my balance, my payslip, my UAN. Self-service does not save HR time at this stage, because there is no HR. It saves founder time.
Titles, reporting lines and salaries move constantly in the first two years. Effective-dated records mean a raise in August does not rewrite what July looked like, which matters the first time an investor, an auditor or a departing employee asks.
You do not have to switch everything on at once, and for a company like yours there is a sensible order. This is it, with the reasoning attached.
Almost every HR problem a young company hits in its second year traces back to a decision that was never made in its first. Five are worth settling early, because each becomes a precedent the moment somebody asks.
How much leave, of which kinds, accruing on what basis. What the notice period is, and whether it differs by seniority. How long probation runs, and what confirmation requires. Whether work from home is a right, an arrangement or an exception. And what the salary structure looks like, specifically the split between basic and allowances, because that decides the PF cost of every offer you make afterwards.
None of these needs to be generous or elaborate. They need to exist in writing and be applied identically, which is exactly what founders find hardest when the person asking is sitting three feet away.
Professional Tax registration is a state matter and often applies from the first employee, which surprises founders more than any other obligation. TDS under Section 192 applies as soon as anyone's projected annual income crosses the exemption limit, which in most funded startups is the first engineer.
ESI applicability generally begins at ten employees in a covered establishment, and EPF at twenty, though voluntary coverage before those thresholds is common and sometimes contractual. Each brings a registration, a monthly return and a payment date that does not move because the company is busy.
The reason to configure payroll software for startups with these in place from the first run is not diligence for its own sake. It is that retrofitting eighteen months of contributions, interest and damages across a workforce that has since doubled is a genuine project, and it always lands in the same quarter as a fundraise.
The people section of a diligence request is narrow and specific: a headcount reconciliation, appointment letters and signed contracts, evidence of statutory registration and filing, salary and ESOP records, and confirmation that policies were communicated.
It is rarely painful because the company did something wrong. It is painful because the evidence lives in a founder's inbox, three shared drives and a payroll spreadsheet that has been edited in place, so nothing can be shown as it stood at the time it mattered.
Effective-dated records and per-version policy acknowledgement are the whole answer to this. They cost nothing to maintain while the company is small, and they are impossible to reconstruct once it is not.
The Starter plan is kept narrow, attendance, leaves, directory and documents, because a fifteen-person company does not need succession planning. Payroll and performance arrive with Growth, and switching them on is a setting rather than a migration, because they read the same record you have been building since your first hire.
The statutory pieces are the argument for starting early, not the module count. Registering the right identifiers and applying the correct EPF, ESI, PT and TDS treatment from your first employees costs nothing extra and avoids a retrospective correction later. The Starter plan exists for exactly this size.
Attendance capture is about establishing payable days, not policing presence. For a distributed team that usually means browser or mobile check-in without a geofence, so that leave, unpaid days and the payroll run still reconcile to something.
Yes, employee master data, historical leave balances, previous salary structures and department hierarchies come in through structured Excel templates, with a dry-run payroll before the first live cutoff.
No. Records are effective-dated, so a raise in August does not rewrite what July looked like. That matters the first time an investor, an auditor or a departing employee asks what the position was at a past date.
Yes, and it is the usual sequence. Attendance, leave and the employee directory come first because they establish the record; payroll is switched on when you are ready to move it, ideally at the start of a financial year or with one month run in parallel.
It is a cost decision as much as a compensation one, because basic pay drives the PF wage and therefore the employer's contribution on every offer. Decide it once per grade rather than per offer, so two people hired a year apart on the same band are not paid under different arithmetic.
A headcount reconciliation, appointment letters, evidence of statutory registration and filings, salary and ESOP records, and confirmation that policies were issued and acknowledged. The difficulty is almost never the answer; it is showing the position as it stood at a past date, which is what effective-dated records exist for.
Starter covers attendance, leaves, the employee directory and documents. Payroll and performance arrive with Growth, and switching them on is a setting rather than a migration because they read the same record you have been building since your first hire.
Looking for a custom walkthrough or have specific statutory policy requirements? Connect with our product specialists in Pune for a 1-on-1 consultation.
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