Payroll

Paying DAO members is a complicated topic and can vary heavily by jurisdiction. While many DAOs simply send crypto to contributors, it's important to consider the legal and tax landscape when it comes to paying DAO members all over the world with cryptocurrency. The two most common ways for DAOs to pay members is either with a stablecoin like USDC or in the DAO's native token (for example, Uniswap might pay someone with UNI tokens). Paying DAO members using the DAO's native token has the benefit of being "free" to the DAO, in the sense that the DAO's treasury does not lose its stablecoin reserves by issuing those tokens. Continuously putting more tokens into the ecosystem can dilute the current token holders, so it's important to ensure tokens are paid out slowly and ideally with vesting or lockup periods that prevent contributors from dumping large amounts onto the market.

Paying contributors can vary by jurisdiction, since each has its own requirements for reporting income, tax uwithholding, and benefits. Products like Utopia Labs, Parcel, and Rise can help ease the burden of implementing a compliant payroll system by offering tax compliance in thousands of different jurisdictions and handling W2 & 1099 filings. It's also important to understand the distinction between hiring contractors, part-time, and full-time employees. Each arrangement has different expectations and responsibilities for an employer when it comes to benefits like paid time off, healthcare, and sick leave. Usually, most DAO contributors work as part-time contractors which can offer the most flexibility to a DAO and the contributor, but in cases where someone is working for the DAO full-time, it may be necessary to offer certain benefits. Platforms like Opolis can help make it easier for DAOs to coordinate benefits, while other DAOs use more traditional providers like Gusto behind the scenes. One final note is to avoid hiring contributors on the Office of Foreign Assets Control (OFAC) sanctions list, for example people in North Korea. While DAO payroll tools can get you pretty far, it's ultimately best to have a tax professional take a look at your DAO's payroll practices especially as it scales.

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