Our company has been searching for a good payroll solution for… well, pretty much since the inception of our company.   Not only do we need payroll for ourselves, but we process payroll for the majority of our customers as well.

The well-known full service systems (ADP, Paychex) are not only expensive, but they still require us to know what the heck we’re doing (which becomes more difficult as our customers branch into new states and municipalities).  And we still have to do most of the heavy lifting.  Some of the systems are nice and simple and some are a little crazy and unnecessarily complicated.

So since we felt like we were doing 95% of the work anyway, we looked to some of the well-known DIY systems and selected Intuit Online Payroll.  There were some definite benefits to this system over some of the other “full service” systems, but there were some drawbacks as well.  My biggest concern had to do with the fact that we were still having to manually sign and mail in state unemployment tax returns (and the related checks) as well as local tax returns.  It’s not such a big deal if you have a handful of clients, but in short order, we were finding ourselves having to practically create a database to track which forms had to be signed by whom and sent where for which customers.  Ugh.  What’s with the paper forms and checks??  The entire process was becoming unmanageable and completely antithetical to our company’s entire existence.

Enter ZenPayroll {insert angelic singing here}…

I’ve just finished our second round of payroll for Catching Clouds using ZenPayroll, and here are my thoughts:

STUFF I LIKE:

  1. They pull out the payroll taxes from the bank account at the same time they pull out payroll.This means that not only do we not have to worry about keeping track of who has paid what and when, but we also don’t have to deal with customers who pay taxes late.  It’s not even an option.  We’re now saving our customers from themselves and helping them properly budget for employment costs.
  2. They pay all payroll taxes and file all returns automatically.Because ZenPayroll is pulling the taxes out real-time, there’s no need for us to initiate the payment of taxes or filing of returns.  They just do it.  We don’t have to remember or tell them to do it (or even *see* it).  And if a notice comes, ZenPayroll deals with it.  (What?!)  Ah, the benefits of full service.They also file ALL state and local tax returns.  Yes, this includes the SUTA and Denver local returns.  No more queuing up bill payments on Bill.com for approval, tracking a customer down for a paper check, or requesting paper returns be signed by anyone.  It’s all just done.
  3. They integrate with Xero When payroll is run, they push a Purchase Invoice to Xero with all the coding and amounts pre-filled.  No more journal entries or manually created bills or anything.  Our bookkeepers don’t need to be experts in payroll for the transactions to get posted timely and accurately.We review, approve, and reconcile.  Done.
  4. Auto-Pilot FeatureThis is how automation is supposed to work!  If we have a client whose employees are all salaried and set up for Direct Deposit, we can set the Auto-Pilot feature which literally runs payroll automatically without any intervention from us at all.  At all!  Like seriously, people get paid, taxes get paid, returns get filed, and payroll gets recorded automatically.  Awesome.
  5. Employee Access / Self-OnboardingWhen a new employee starts, we have the option of sending them an email which will take them to an online form to complete their SSN, address, federal & state info, etc.  When done, it returns to us so we can verify details entered.Their login gives them access not only to past paychecks, but it also gives them access to the W-4, I-9, and Direct Deposit forms we have on file.  They have complete visibility regarding info we have on file for them, and they can update their own info as needed.  One of the benefits of cloud accounting is the ability to have true real-time collaboration, and this type of visibility for employees is invaluable.(And the system actually seems to be easily accessible.  I don’t expect to get calls and emails every week from employees asking us why they can no longer access their paystubs.  (We currently spend about an hour or two on this issue every month.  Seriously.))
  6. Online FormsWhen we’re setting up a new client, there is a form they always need to sign giving the payroll provider the ability to do all this stuff on their behalf.  ZenPayroll automates it so you just tell them who the owner is, and they email the form to that person for electronic signature.  Brilliant.
  7. Integrates with ZenefitsThis is another cloud tool that will streamline onboarding employees and help a company obtain and manage HR benefits.  It’s pretty cool.  ;o)
  8. Forms W-2 (and 1099s run with payroll) are IncludedWe haven’t gotten this far, but W-2s will be sent out electronically, so there should be very little action we’ll need to take at year-end.
  9. They integrate with TSheetsOk, so we’re not actually using TSheets with our customers yet, but we’re heading that direction, and I have a feeling it’s going to make our lives easier.  Because it integrates with ZenPayroll, that’s icing on the cake.
  10. Employees are made to feel all warm and fuzzy on payroll day.ZenPayroll sends cool notifications to the employees letting them know they’ve been paid.  There’s a easy link to download paystubs, and a funny factoid such as how many cans of silly string this period’s salary could buy you.

STUFF I DON’T LIKE:

  1. Not in All StatesWe really need them to be in all states before we can use them for all of our customers.  They’re currently in 10 states (including Colorado which is the most important one for us) and are hoping to be in all 50 by the end of the year.  We’ll have to wait and see how that goes.[Ahem, ZenPayroll, if you happen to read this blog, I’d really like to see IN, VA, and KS.  :o)]
  2. Lead Time is 4 Business DaysThis is a big drawback for me, but I know they’re working on trying to get this down to two business days.As an example about why this is a problem… I ran the 7/5 payroll which hits on 7/3 due to the weekend and holiday.  Due to the four-day lead time, it needs to be processed no later than 3:30 pm on 6/27, but our payroll period doesn’t end until 6/30.  This may not be a huge issue for salaried employees, but now we’re going to need to adjust payroll periods and/or paydates for the companies who have hourly employees to give us sufficient time for processing payroll.[As a side note, we did need to stop a Direct Deposit transaction last pay period for someone after it had been processed (but three days before receipt of said payment by the employee).  We contacted support who was incredibly helpful, and the Direct Deposit was cancelled and the net payroll amount was refunded to us in just a couple of days.]
  3. S Corp Owner CodingCompensation paid to owners of an S Corp should be taxable payroll just like any other employee, but I want the wages coded to a separate line item (“Officers’ Compensation”) to make it easy on the tax preparers at year end.  ZenPayroll doesn’t seem to allow for this.If you choose “Owners” for the payroll, it comes out as a non-taxable draw, but you can’t code it to Equity (Distributions) which is a balance sheet account, not an expense.  They force it to an expense account, so the bill would need to be adjusted manually each time.  Kind of a bummer.We reported these issues to support, so I’m hoping these small changes can be knocked out in time.
  4. Additional Taxable CompensationTaxable benefits have to be set up in a counter-intuitive fashion because there are no real choices beyond “wages,” “tips,” “overtime,” and other basic compensation types.  We have Internet Allowances which are taxable benefits for the employee but are also paid out in cash.  To make this work correctly for taxes, we need to enter a Reimbursement of $25 to the paycheck in addition to entering a Benefit Paid by Employer of $25.  The first item gets the cash to the employee, and the second gets the taxes taken out, but when you look at the paycheck stub, it feels like the $25 has been paid twice.  I’d like to see a compensation field for Taxable Benefits Paid to Employee.

That’s pretty much all the negatives I could come up with.

Overall, I’m super-excited about this switch and am looking forward to seeing the benefits it creates for all of us who work with payroll every day.  ZenPayroll is a total breath of fresh air, creating a truly full-service cloud payroll system without charging an arm and a leg.
Here is a quick, three-minute demo.

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