The Top 10 Small-Business Payroll Solutions
Payroll is a joy for employees and a major administrative headache for small-business owners. Frequently — sometimes weekly — one must spend hours making hairsplitting calculations, completing government reports, depositing tax money in various accounts, and writing and signing checks. There are quarterly filing and tax-payment requirements too, and occasionally, the dreaded phone call from the tax collector with a question about something you had long since forgotten.
Small wonder then that payroll is one of the most commonly outsourced functions in a small business. Most business owners turn to their accountants for payroll — after all, the accountant handles all the other numbers. Millions turn to third-party services that specialize in handling payroll, such as Paychex Inc. Still other companies get assistance from payroll software used in-house. A growing number of businesses are handling their payroll chores entirely over the Internet. And to confuse matters, every way that payroll can be handled is blending with every other way.
Long a favorite among small businesses for its simplicity and efficiency, Intuit Inc .'s QuickBooks accounting package has added a payroll module. "Its ease of use, integration, and multiple payroll options earn it top honors," said the June 27, 2007, issue of PC Magazine. There are five payroll options, to be exact, ranging in price from $100 to $300 per year. The Intuit Online Payroll service, which does not require QuickBooks or any local software, is priced at $29.95 per month. Annual support plans cost just about as much as the products themselves.
SurePayroll is an online payroll service that integrates well with popular desktop accounting software products such as those from MYOB Ltd. At around $45 per month, it's a bit pricier than its competitors, but at payroll tax time, it will file your returns for you. The company will even represent you before the IRS (Internal Revenue Service) should any questions arise.
XpressPayroll is the small-business service of CompuPay , an online payroll solution that made its mark in the midrange and enterprise markets. XpressPay includes simple processing — the company claims you can do your payroll in seven mouse clicks; full-service tax filing, compliance and payment for all payroll taxing authorities for one state; direct deposit for all employees; check and report printing on your site; online pay stub detail and W-2 forms; a general ledger link; and online reports.
Paychex's Online Payroll is a tightly integrated set of Web-based services that has been fine-tuned constantly since its introduction in 2001. The Web site offers simple to complex payroll-management features with multiple rates of pay and complex deductions, as well as 401(k) and workers' compensation modules. Paychex Online Payroll can even post payroll data into popular general ledger programs such as Sage Software Inc .'s Accpac, Thomson Tax & Accounting's Creative Solutions, MYOB products, Sage Software's Peachtree and Intuit QuickBooks.
PayCycle Inc . claims that 50,000 small businesses use its online payroll service. A simplified and relatively new payroll service, PayCycle 2007, supports both employee pretax contributions and employer contributions to health savings accounts. It also supports electronic filing of the new IRS Form 944.
ADP (Automatic Data Processing) Inc . is a major data-processing service provider in the midsize and enterprise markets. Now, the company is making inroads into the small-business sector with its EasyPay payroll service. Optional payroll services include direct deposit for employees; filing, depositing and reporting of payroll taxes; and even signing and stuffing of payroll envelopes.
The aforementioned Peachtree is a small-business accounting package sold by Sage Software. Its Full Service Payroll module takes all the drudgery out of calculating your business's payroll. It gives you the option of having checks delivered to your door or having them printed locally. Direct deposit is a third choice. The software can also file your company's federal, state and local payroll taxes.
E-chx Inc . is a rapidly growing online payroll service catering to retail, restaurant, accounting and legal firms. While young (its domain name was registered in 2002), E-chx boasts that its payroll-service specialists average more than seven years of experience. The company offers a two-hour callback guarantee or your next payroll is free.
PayUSA Inc. , in contrast, was founded in 1969 — and it still has the first customer it landed that year. PayUSA touts the speed of its Payroll In a Flash service, which can deliver reports and even printable images of checks to your email inbox within hours of submitting your payroll data.
Why not get your payroll service from the same place you get your payroll money? Wells Fargo Business Payroll Services provides checks and direct deposits, files quarterly tax returns, makes tax deposits, and sends year-end W-2 and 1099 forms to your employees.
When considering an outsourced payroll service, don't let price alone be your guide. The IRS said that the average business pays $845 in penalties on late or miscalculated payroll taxes. Consider how long the vendor has been in business. Ask about its employee-to-client ratio; 1 to 200 is about average, and lower is better. Ask if the company will stand behind its work in front of the IRS if need be. Make sure that the vendor has experience with your type of business and payroll needs. Get references and call them; a botched payroll can be expensive in terms of both morale and finances.