Payroll Made Easy: Automated Payroll Service Claims To Make the Process Quick and Painless

This story appears in the March 2016 issue of Entrepreneur. Subscribe »

Zenefits is one of those Silicon Valley unicorns -- a billion-dollar company once the darling of investors. It grew by offering free accounting and automated, cloud-based HR programs for small businesses (and made its money selling health insurance). But after three years of boom times, the company’s revenue growth slowed. So now it’s expanding its services -- and the company’s attempt to save itself may also save entrepreneurs a big hassle.

The new product: automated, free payroll services.

The service, which is still being tested with a small group of companies, aims to handle payroll for employers of any size. It automates state tax filings in all 50 states and deductions for health and retirement benefits and adjusts paychecks based on vacation days and sick leave taken. It handles prorated checks for new hires as well as COBRA premiums and final payouts for exiting employees. (An upgraded version, at $25 plus $4 per employee per month, lets companies tweak deductions or contributions for benefits programs outside of Zenefits.) The company is aiming to roll out the service on April 1.

The idea came out of necessity. Last summer, paycheck-processing behemoth ADP cut off access for Zenefits’ clients, so the startup’s founder, Parker Conrad, decided to treat the crisis as an opportunity. “There are so many irritating things about payroll -- paperwork, admin, compliance -- and I’m convinced we can make wide swaths of that go away by having a single, integrated system of records that connects to everyone,” he says.

Should you sign on? Maybe -- but keep the risks in mind. Zenefits is still young and trying to do complex, disruptive stuff. “They haven’t quite figured out the legal and licensing regulations for selling benefits online,” says Jody Padar, CEO of New Vision CPA Group in Walnut Grove, Ill., and author of The Radical CPA, “so what if you’ve entered your payroll and they get shut down before your employees get their paychecks?”

But so far, at least, early adopters seem pleased. One of them is Tivilon, a nine-person company in Baltimore that produces healthcare-focused digital marketing. It was using Zenefits for HR and health insurance services, and CEO Mark Zawodny says payroll is just as easy to use. “We’ve run four payrolls successfully,” he says, “and it only takes me three minutes each now, instead of 20 to 60. That is invaluable.”