Payroll: It Doesn't Have to Get Ugly

By Wayne Kawamoto | Posted August 16, 2005

Ask any small business owner about his or her least favorite task and most will say — without having to fire a synapse — payroll. This tedious process requires you to identify and fill out forms, keep up with ever-changing regulations and understand cryptic abbreviations. Then there are those killer deadlines, complete with significant fines for failure to comply. Fortunately, payroll services offered by PayCycle and Paychex, and dedicated payroll features that support Peachtree and QuickBooks, can make your life easier — for a price.

Payroll service companies offer many advantages. They automatically calculate earnings, state and federal payroll deductions and taxes, and they fill in payroll tax forms. Plus, you can trust the services to stay up-to-date with payroll and tax regulations, apply the latest state and federal tax tables and submit the correct forms. Note that while all the services offer options to file and pay state taxes, not all states support this capability.

The companies guarantee accurate, timely deposits and filings with federal, state and local agencies, and — as long as the information you provide is timely, complete and accurate — they will pay penalties that are their fault. When the number crunching is complete, you can print employee checks or opt for direct deposit, as well as refer to reports to stay abreast of your expenses.

If you manage your books using QuickBooks or Peachtree Accounting, you can rely on their associated payroll services to readily accept data and perform payroll for you. Each payroll program offers the same familiar look and feel of its associated accounting package, and both update the ledgers on your PC. These optional services go far beyond the basic payroll features found in the standard accounting programs.

Peachtree
Peachtree Accounting's payroll service is relatively new, having been introduced only a year ago with Peachtree 2004. Through integration with a wizard program called Peachsync, the system transfers and synchronizes data with a PC across an Internet connection.


Peachtree Accounting's payroll service
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The payroll program produces and delivers checks and reports electronically so that you may print them from your PC, have them physically delivered to you or rely on direct deposit through an additional service. The payroll service makes all federal, state, and local tax deposits and will research and respond to inquiries from tax authorities.

The Peachtree payroll program offers an online interface that lets you view and modify payroll information and save reports in PDF format to be printed, e-mailed or archived. This handy feature means that you don't have to be at the office to approve payroll.

Pricing varies based on various formulas, but a business with five employees can expect to pay around $30 per pay period, depending on selected options. If you're using Peachtree Accounting, 2003 or an even older version, you'll need to upgrade to the 2006 version to take advantage of the payroll service.

QuickBooks
Beyond the payroll processing and federal form filling capabilities found in the standard QuickBooks software, Intuit offers a variety of payroll services including QuickBooks Enhanced Payroll Plus and QuickBooks Assisted Payroll.


Quickbooks' payroll service
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Enhanced Payroll Plus offers tools to fill out state tax forms and costs between $399 and $499 per year, but Intuit's most comprehensive solution is QuickBooks Assisted Payroll. With this service, you can enter payroll hours and amounts into QuickBooks when you want and transmit payroll data to Intuit for processing. You can download processed data and print paychecks and reports directly from QuickBooks.

The service also files federal and state payroll taxes and deposits, and at year's end, prepares, prints and mails W-2 forms. QuickBooks Assisted Payroll also offers advice from payroll experts at no extra charge, and starts at $79 a month for five employees paid biweekly.

PayCycle
With all of the advantages of an online system, PayCycle Payroll Plus offers a first-rate, Web-based payroll service that handles end-to-end payroll needs. From paychecks to W-2s, Paycycle offers free support from payroll experts, lets you print, hand write or direct deposit checks, and it pays and files federal and state payroll taxes electronically.

The service sends you e-mail reminders and lets you simply click a link to enter and view payroll data. You enter the hours for your workers and then create checks — as well as direct deposit pay stubs — on your printer. You can also have the program pay and file federal tax forms and print W-2s.


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PayCycle Payroll Basic offers features to pay employees and electronically handle federal tax deposits and filings. This service, which does not support contractor payments or assist with state tax deposits or filings, costs $24.99 per month for one-to-five employees plus $1.50 per month for each additional employee.

PayCycle Payroll Plus, the company's higher-end service, lets you pay independent contractors by check or direct deposit. If your state lacks electronic filing, Payroll Plus provides signature-ready forms or step-by-step guiding worksheets. The service costs $42.99 per month for one-to-five employees or contractors and $1.50 per month for each additional person.

Recognizing the fact that many people rely on accounting programs, PayCycle exports data to QuickBooks, QuickBooks Online and Microsoft Money and, for analysis, to Microsoft Excel. PayCycle's 1099 E-File Service costs $20 per year and lets you create and electronically file up to 100 1099-MISC forms and print them. If Web-based payroll sounds attractive, PayCycle is definitely worth a look.

Paychex
Paychex offers a comprehensive and sophisticated suite of payroll processing, human resource and benefits solutions for small to mid-sized businesses. Its services include payroll processing, tax payment and filing, and most notably, it offers lots of options for transmitting payroll data, including phone, fax, the Internet and a program called Paylink. In addition, the company offers solutions that help you track employee time and attendance.

If you want to use your PC, Paychex's Paylink payroll software accepts employee hours and sends this information, via modem, to a Paychex branch for processing. The software applies the payroll rules and lets you check status through its reporting features. A Return-of-History feature loads the payroll information into your PC so that your data is complete and up-to-date.


Paychex's Paylink payroll service
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Another offering, Paychex Online Payroll, lets you enter payroll over the Internet to calculate an employee's net pay and write manual checks. As with the PC software solution, program sends data to Paychex for processing. If you like, you can also use an Internet-based time sheet that accepts employees' hours and earnings. Pricing depends on various factors, but an average price for processing payroll on a weekly basis for a 10-employee company is $33.73 per pay period.

If you run a business that relies on hourly workers, Paychex offers a program called Time In A Box, an advanced time and attendance system designed to track employee hours and minimize the time you spend managing and compiling time sheets.

The Standard Package includes the Time In A Box software, a choice of computer or electronic time clock (with a magnetic strip or bar code reader), cable and badges. The Professional Package includes the Time In A Box software, cable, and either an electronic time clock with bar code reader and badges, or a biometric terminal with networking options.

Bottom Line
If payroll is causing you nothing but pain and frustration, or simply taking up too much of your valuable time, a payroll service could be just the ticket. Which service you choose depends on how you manage your books and the way you like to track employees' hours. But such a service can take over and let you focus on what you do best, running your business.

Over the last ten years, Wayne Kawamoto has written over 800 articles, columns and reviews about computers, new technologies, the Internet and small businesses. Wayne has also published three books about upgrading PCs, building office networks and effectively using and troubleshooting notebook computers. You can contact him through his Web site at www.waynewrite.com.

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