Payroll Without the Pain

Having employees working for your business is a blessing and a curse. That you need to hire people to handle all the work is a good sign, but having to pay them is kind of a buzz kill. And it’s not just the actual parting with the money that hurts; the mechanics of figuring out each individual’s paycheck, withholding amounts, benefits contributions, and so on is beyond the abilities of most business owners (unless you own an accounting firm, of course). Add in the threat of huge IRS penalties if you screw up your state and federal quarterly payroll taxes, and it’s no wonder that most small businesses hand over the whole mess to an accountant or payroll service&#151and pay dearly for the privilege.

Fortunately, three online services make it relatively easy to handle payroll on your own. EasyPayNet (from payroll service giant ADP), Intuit QuickBooks Online Payroll (from the leader in small business accounting software), and PayCycle 2007 (the latest iteration of a pioneering online payroll service) each provide the tools you need to calculate your payroll properly, produce the checks, and take care of all the governmental filings that need to happen.

EasyPayNet’s tab-based interface makes it easy to find the payroll task you need. (Click for larger image).

According to research released by Intuit, of the 10 million businesses with 50 or fewer employees in the U.S., 26 percent handle their payroll manually. That means every payday, there are 2.6 million souls slaving over a calculator and paper checks and forms.

That’s the position Megan Orsini found herself in when she took over the task at Orsini Landscaping, an 11-employee business based near Albany, NY. Orsini took on the task from her mother-in-law more than five years ago, and quickly determined there had to be a better way. She researched “payroll” on the Web and came upon PayCycle and others.

“I have a marketing background, not crunching numbers,” Orsini says. “But I tested a bunch of them and found PayCycle the most powerful and the easiest.” Since that time, other big names in payroll and accounting have released online services to help the do-it-yourselfer.

A Hybrid Approach
One of the relative newcomers is ADP’s EastPayNet. For principals nervous about tackling payroll themselves, EasyPayNet offers a good transition. It’s more expensive than the other services we looked at (pricing starts at $26 per pay period for five employees, or $35 per period if you add ADP’s payroll tax service), but you get a lot of handholding. For example, a dedicated support rep will guide you through setting up items like vacation pay, sick time and benefits deductions. That rep will also walk you through doing your payroll the first time. ADP will even enter your employee data into the system for you.

The tab-based Web interface is clean and easy to navigate. ADP boasts that EasyPayNet delivers “4-click payroll”: Once set up, you can complete your payroll with just four mouse clicks (provided employee information doesn’t need to be changed). ADP will then print and mail the checks or direct-deposit notices for you, or you can print them yourself.

Of course, if you do have employees to add (or delete), the software makes it easy to do so. The Edit Employees tab brings up a list of your current workers; click on one, and his or her pertinent information (salary or hourly wage, deductions and so on) appears in the central pane. You can even add custom fields that don’t necessarily pertain to payroll, such as information about an employee’s company car.

The EasyPayNet service offers lots of features and gives the business owner a good degree of control. For example, you can record a manual check if needed, and you can override the standard deductions taken from a check (say, for a bonus payroll). A General Ledger feature interfaces with QuickBooks, so your books are always in sync with payroll.

And since ADP is a leader in payroll and similar services, you have access to the retirement products and worker’s comp plans the company administers. A help desk will assist you with payroll and other questions such as what government paperwork you need to fill out to add or to terminate an employee.

Online Accounting Tie-In
Intuit’s QuickBooks has long been the leader in small-business-accounting desktop software, and QuickBooks Online Edition ($19.95/month) brought that power to an online model. The latest extension of that is QuickBooks Online Payroll. For an additional $14.96/month, the online module will handle all your payroll needs, from figuring paychecks to filing the necessary IRS forms.

A handy wizard-based interface helps new customers get started. An interview process (which will be familiar anyone who uses Intuit’s tax products) helps ensure you don’t miss any important steps or pertinent information.

Once you are set up in the system, the main “dashboard” screen displays your employee overview information and things-to-do list. You can easily fill in time sheets, pay federal and state tax liabilities, prepare IRS forms, and of course create paychecks (the service does not yet support direct deposit). And of course, the service is completely integrated with QuickBooks Online, so as you create paychecks and pay your taxes, those debits automatically show up in the accounting program’s ledger and bank resister.

An Improved Original
PayCycle was one of the original online payroll services aimed at small businesses, and it now boasts more than 30,000 customers. The newest version, PayCycle 2007, adds even more features and remains affordable: $24.99/month for basic payroll and federal tax filings, or $42.99 month for the basic features plus the ability to handle state payroll tax filings, direct deposit and more.

On payday, simply enter the hours and other incidentals for each employee, and PayCycle handles the rest. (Click for larger image).

The clean Web interface was designed to be approachable even for people who have never handled payroll before. Simply enter your business and employee information, and you’re ready to go. Alerts remind you when it’s time to run your payroll or pay quarterly taxes.

PayCycle offers a completely paperless solution in 25 states (and counting): Federal and state filings and payments are handled electronically, and employees who so choose can be paid via direct deposit. Employees can also access their pay stubs online electronically, handy when proof-of-income is required (such as when applying for a loan).

The service also offers online benefits tracking. You can now keep tabs on employees’ 401K contributions; health, dental and FSA deductions plus accrued sick and vacation days.

In addition to the ease of use and affordability, what pleases Megan Orsini most about PayCycle is its customer service. “I have a toddler, so I fit payroll into the schedule as I can, which could be anytime,” she says. “I can call at any point in the day and get a live, knowledgeable support rep.”

For business owners who dread the toil payday entails or who pay too much to just make it go away, an online service is worth a look. Their options are more robust and varied than ever, and they can put payroll back under your control.

Jamie Bsales is an award-winning technology writer and editor with nearly 14 years of experience covering the latest hardware, software and Internet products and services.