E-Payroll Anyone?

Outsourcing payroll processing has been common for decades. Now, it's moving to the Internet.

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Before Loftis Metal Supply Inc., a 23-employee company in Nashville, was bought by Don Raymond and an associate, it did its payroll internally with an off-the-shelf PC product. Almost immediately, Raymond farmed out the process to PayMaxx Inc., a payroll-processing and -administration company based in Franklin, Tenn. “They could do it far less expensively than I could,” he says.

In fact, the service, called PowerPayroll, costs $33 a month plus $1 per check. That pricing includes overnight courier service for delivering the checks; filing of all federal, state, and local taxes; direct deposit of employee paychecks; new-hire reporting; and creation of year-end W-2 forms.

Outsourcing payroll processing has been common for decades, but now, payroll pro-cessors are offering Web-based versions of their services for small businesses. The Web services have the added advantages of requiring no software installation and being accessible 24 hours a day, seven days a week.

Ceridian Corp. offers an Internet payroll product called Powerpay. It allows a business to perform various online functions, such as add an employee to the payroll, specify the number of hours an employee has worked, change employee data, and specify voluntary deductions. Ceridian declined to discuss pricing matters, but Brian Regan, vice president and general manager of Ceridian Small Business Solutions, in Pine Brook, N.J., says it’s common for payroll processors to charge extra for services like direct deposit. “What’s going to be interesting to watch,” he says, “is if established [payroll] businesses that move to the Internet are going to behave like other Internet companies that have greatly reduced their prices.” (So far, Ceridian hasn’t, says Regan.)

It’s not difficult to use an Internet payroll service. When Raymond logs on to the PowerPayroll Web site, a list of his employees appears in his Web browser. When he clicks on an employee’s name, a payroll record for the worker appears. Then he keys in payroll information from the worker’s time card into the form. He can also edit any of the employee’s personal information–including exemptions, withholding, direct deposit, address, and pay scale.

When Raymond is finished, in about an hour, PowerPayroll displays a list of his employees, what he’s paying them during the pay period, and a grand total for the payroll. “Then I push a button and off it goes, and the next day I get the checks,” he says.

Another payroll processor catering to small businesses is the industry giant, Automatic Data Processing Inc.; its Emerging Business Services division offers an Internet solution called EasyPayNet.

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