Technology Tidbit: Using Technology to Lower the Cost of Payroll

The Small Business Administration website answers the following question: Small businesses comprise what share of the U.S. economy? Small businesses make up:

99.7 percent of U.S. employer firms, 64 percent of net new private-sector jobs, 49.2 percent of private-sector employment, 42.9 percent of private-sector payroll, 46 percent of private-sector output, 43 percent of high-tech employment, 98 percent of firms exporting goods, and 33 percent of exporting value.

(Source: U.S. Census Bureau, SUSB, CPS; International Trade Administration; Bureau of Labor Statistics, BED; Advocacy-funded research, Small Business GDP: Update 2002-2010, www.sba.gov/advocacy/7540/42371).

How many small businesses are there?

In 2010 there were 27.9 million small businesses, and 18,500 firms with 500 employees or more. Over three-quarters of small businesses were nonemployers; this number has trended up over the past decade, while employers have been relatively flat.

From a macroeconomic level, business is good for the United States. That is how financial assets are invested into the country. The exportation of natural resources (agriculture, people) is good for the country and why India is positioned for growth as American companies buy their natural resources of highly skilled engineers and cheap labor. From a microeconomic level, the government including city, county and state need employers with employees to keep the tax base stable and revenues flowing to pay for basic services such as streets, schools, police and military forces. I am seeing overall trends on a macro and micro level which are decreasing the cost of doing business using technology which, overall, benefits the economy.

This is where technology and those Indian, not native American, engineers who are receiving outsourced United States jobs are helping to grow the United States economy. Today's topic is Payroll. Payroll is a tedious headache with local, state and federal taxes and reimbursable expenses. Who has time for that headache? ADP is the leading provider of Payroll services with PAYCHEX not far behind. These are major players in the small business market but their pricing structure are not the most competitive for small firms with 10 or less employers and non-employer firms. Now the banks and accounting software companies have stepped in the game to fill in the gap using software as a service or cloud computing business models.

PC world magazine writes, "Overall, Intuit Online Payroll is sufficiently user-friendly and feature-rich for most small businesses. It offers additional help and tips for many topics and fields while you're inputting data. For instance, during the initial setup it gives tips on the employer ID numbers you need and how to obtain them. When you're entering employee data, it explains how to verify Social Security numbers. Intuit also provides a to-do list showing required and recommended tasks, and its email reminders can help keep you on your toes." The article compared Intuit to ADP's RUN for online payroll. The RUN review said "Just like Intuit Online Payroll, RUN works with QuickBooks, QuickBooks Online, Zero, and other accounting software products with a generic file output. Unlike the Intuit competitor, however, RUN gives both employers and employees access to payroll information via online access and mobile apps. Overall I found RUN to be feature-rich and user-friendly. But it could use some improvement with the help function, such as more tool tips on data fields so you don't have to consult the separate help section for an explanation of tax lingo. However, since it has 24/7 payroll support, if you're in a bind at midnight you can talk to a person to get assistance." Top ten reviews also ranked Intuit Online Payroll as the number 1 online payroll service for 2014. That is great news for small businesses who are ready to offer payroll services for their employees and compete with larger firms. (Sources: http://www.pcworld.com/article/2010572/payroll-services-in-the-cloud-intuit-vs-adp.html and http://online-payroll-service-review.toptenreviews.com)

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