Online Services Reduce Payroll Pain

Think you’d rather do just about anything instead of your company’s payroll? Not only do you have to identify, organize and fill out cryptic forms, you have to follow convoluted and confusing regulations and equally confounding procedures. And if this considerable test of your patience isn’t enough, when you make an honest mistake, you’re stung with a significant fine. To reduce payroll pain, online services such as ADP, Intuit, Paychex and PayCycle that will perform the dreaded deed for you.

The online payroll services here calculate earnings and determine federal and state deductions by referring to up-to-date tax tables and then insert this information into the correct forms. And beyond these features, the services will help you keep up with filings and deposits with local, state and federal agencies.

When the online services have completed payroll, you can consult reports as well as print checks for employees or offer them direct deposit. Another advantage when using online services, you can manage and monitor payroll through any computer with an Internet connection.

ADP, Paychex and PayCycle offer stand-alone online payroll services. Intuit offers a similar stand-alone payroll service that was recently introduced, as well as one that’s tied directly to its popular QuickBooks accounting program. We’ll take a look what they offer and then discuss what to consider before choosing one over the other.

Well-known payroll powerhouse ADP recently released a new program called Run, which supports small businesses with services that range from payroll calculations and direct deposit to tax filing.

The service emphasizes ease of use; you can configure Run through step-by-step wizards. And on payday, Run generates a spreadsheet that lists employees and their work hours and allows you to make adjustments. Then, it calculates taxes and deductions. When payroll is complete, you can print paychecks and reports or have ADP print and deliver them.

The service provides reminders when it’s time to issue W-2s and lets you view these online and then print them for your employees. Run files and pays federal taxes electronically and populates state and local tax forms with data so they’re ready to print. You can export journal entries to Microsoft Excel for further analysis.

The service is priced at a reasonable $29.99 per month with no extra costs for services such as direct deposit or electronic tax filing.

PayCycle screen shot

Intuit Online Payroll reminds you of key tax deadlines.

(Click for larger image)

Intuit Online Payroll
While Intuit has long offered a solid payroll service that works well with QuickBooks, the company’s flagship accounting application, it recently launched Intuit Online Payroll, a new stand-alone solution for small businesses that don’t use QuickBooks.

The service manages and pays employees, handles taxes and files state and federal forms. In classic easy-to-use Intuit style, it features a one-time setup questionnaire and an initial checklist that lists the data that you’ll need to supply. The service also provides to-do lists and sends e-mail reminders to let you know when key expenses, such as payroll tax payments, are due.

After entering employee hours for a pay period, you can immediately print paychecks and stubs or rely on Intuit’s direct deposit service. The service provides filled-in and ready-to-print tax forms for federal filings and for many states — you simply print, sign and mail the forms. Some of the other services such as ADP and PayChex offer more options, but Intuit Online Payroll does the job. It’s currently priced at $29.95 per month.

If you use QuickBooks to manage your business, Intuit offers payroll services through its optional QuickBooks Enhanced Payroll and QuickBooks Assisted Payroll services. Enhanced Payroll offers tools to generate and fill out tax forms while the more comprehensive Assisted Payroll goes beyond by handling payroll taxes. After transmitting payroll data to Intuit, Assisted Payroll files federal and state payroll taxes and deposits, and at year’s end, it prepares, prints and mails W-2 forms.

An additional convenience is QuickBooks “Time Tracker,” a feature for service businesses that records billable hours. The optional service allows contractors and employees to enter hours into time sheets that reside on Web pages, which are downloaded directly into QuickBooks as calculated totals.

QuickBooks customers may find Intuit’s related payroll services a plus because they work seamlessly with the program to share financial and employee data. Enhanced Payroll is priced at $299 per year (at press time, there was a discount for new subscribers). Assisted Payroll is priced at $59 a month. And if you don’t use QuickBooks, Intuit Online Payroll is a competitive option if you don’t require extra services.

Paychex offers comprehensive payroll and human resource solutions for small and medium-sized businesses. The company’s payroll service lets you submit payroll data via phone, fax or the Web through an Internet time sheet, or you can manage and submit employee information by using the Paychex Online Payroll software on your PC.

Each pay period, Paychex provides processed checks and management reports that summarize employee earnings, department totals and notifications of tax liabilities and deposits. The company’s optional Taxpay service calculates, files and deposits federal, state and local payroll taxes and deducts funds on payroll dates.

An optional Employee Pay Options Package supports direct deposit and other options. Wages can be deposited in one bank account or split between different accounts or accounts at different banks. The Paychex Access Visa Card provides employees with a payroll debit card that lets them make purchases and obtain cash without a bank account. The optional Readychex service ships checks that are pre-signed and ready to distribute, and there’s an additional option to insert checks into envelopes so they’re ready to be mailed.

Pricing is based on the number of employees and how often they’re paid, and the company offers a free quote through its Web site. For evaluation purposes, a price quote for a small business with five employees in the state of California and with no extra services came to $27.61 per month.

PayCycle 2008
With a clientele of 60,000 small businesses, PayCycle is a comprehensive and dedicated online payroll service. Like the others, it lets you enter hours for workers and it create checks, and it offers options for direct deposit. You can choose to have the service pay and file federal tax forms and print W-2s, and it will remind you of key dates via e-mail. The company recently announced the release of PayCycle 2008 that offers faster setup, extended customer support and integration with Peachtree software.

PayCycle screen shot

PayCycle lets you enter hours for workers, and then the service creates the checks.

(Click for larger image)

PayToday Setup lets you sign up with the service and run payroll the same day, which could be a boon to small businesses that may be thinking about switching services but thought that the process would be too much of a hassle. For 2008, PayCycle will offer customer support on weekends.

PayCycle now integrates with Peachtree Accounting software, which eliminates the need to re-enter payroll information into the program (Peachtree also offers its own dedicated payroll service). The Peachtree support is in addition to existing support for QuickBooks, Microsoft Money and Intuit’s Quicken. Among the stand-alone services here, PayCycle is the only one to offer such integration, which is a big plus.

The company’s PayCycle Payroll Plus is priced at $42.99 per month. PayCycle Payroll Basic, which does not support contractor payments or assist with state tax deposits or filings, is priced at $24.99 per month. At press time, the company was offering a 30-day free offer with two more months for $9.99 for a company with up to five employees.

What to Consider
If you’re finding it difficult to keep up with payroll, or you’re making mistakes and incurring hefty fines, you may want to look to an online payroll service.

While the various payroll services discussed here handle many of the same tasks, it’s difficult to compare side to side. The pricing structures consist of basic services and different price points for different numbers of employees, as well as add-ons for such things as direct deposit, tax filing and more. Furthermore, different services offer different add-on options that may or may not influence your buying decision.

The first thing to consider is whether you already use an accounting package such as QuickBooks or Peachtree, which both offer payroll services of their own. You should consider using the dedicated payroll service for your accounting package, which will feature seamless sharing of data. And among the stand-alone services here, PayCycle is the only one to feature integration with popular accounting and money management programs.

If you don’t use an accounting program, you’ll want to consider which, if any, optional services you might use. While the pricing for a basic payroll service is fairly consistent, the extra services vary considerably. One thing for certain, online services can effectively take care of payroll and let you focus on your business.

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 troubleshooting notebook computers.
You can contact him through his Web site at

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