Musings of a West Texas Business Venture

Payroll Processing for Small and Medium Businesses

All companies, startup, small, medium, and large have to make a choice when it comes to payroll. Do It Yourself, or Outsource.

Payroll by itself is not a very complicated process, and usually requires sending the government a check semi-frequently (in the United States payroll taxes are due quarterly for small-ish companies). However, as a company grows, the costs associated with payroll, benefits, overtime, sick days, etc... can become complicated. Quickbooks, and other software packages can do this for you, but it will take some time and dedication to learn the processes. We have done payroll on our own, and when possible, we prefer to not have to deal with the IRS face-to-face.

Outsourcing of payroll can be done easily with one of the "big" two (ADP and Paychex) and we have used both. Many years ago (around 1996 - 2000) we used ADP successfully. Between 2000 and 2004 we did our own payroll. In 2004 we decided to go back to outsourced payrolls and hired Paychex. Unfortunately, we have had non-stop problems with the overdrafting of our accounts, misallocated taxes, misfiled forms, and forgotten payroll calls. And since 2004 our costs have gone up dramatically, from $100 per month to more than $350 in August 2006.

In addition to Paychex and ADP, it appears that Sage, Peachtree, Advantage Payroll Services, and Complete Payroll all perform outsourced payroll processing.

However, the hand-down best solution for companies with fewer than 50 employees is PayCycle. PayCycle is a completely electronic process and they provide plenty of step-by-step instructions to help you get setup. They have truly paid attention to the small details of user interface design.

For instance, to setup an account I needed to fax three verification pages to them, including a voided check. Most companies / web programs would generate the three pages, ask me to print them, make my own cover page, and then fax them to number XXX.YYY.ZZZZ. However, PayCycle actually generated a complete cover page filled out with my fax number and name and their contact information. I printed it out, shoved it in the fax machine, and pressed the "Send" button. Done. Just a small detail, but it made the process easier for me (and I'm what matters).

Paychex is supposed to call me every two weeks to process payroll, a day before our payroll actually runs. They remember to call me about once a month. With Paycycle, I login to their system, two days before the payroll runs, plug in the hours (just as I would in a spreadsheet) and I am done. Simple. Efficient. Easy.

Apparently I'm not the only one that thinks they're great. Here's an article on PayCycle from Small Business Computing, and they have nothing but good to say about PayCycle. In fact, the article is titled "Making Payroll Pleasurable".

The important things matter most with tasks that are generally painful. Efficiency. Ease of Use. Cost. Paycycle charges $9.99 per month, and right now, they are running a special -- the first 30 days are free, the next two months are $9.99, and after that, it is $9.99 for the first 5 employees, and $1.50 per additional employee.

Total savings to us, using Paycycle instead of Paychex:

Tip: Make your life simple. Use Paycycle.

posted by Anthony Presley @ 8:00 AM