Updated for 2015.
Though payroll is an essential function of every organization, it’s easy for nonprofits to make it a low priority as they pursue their core missions. Many small nonprofits struggle to meet Human Resources needs, lacking the funding for dedicated HR staff—and the experience that comes with it. However, not giving enough attention to HR functions can make employees feel as though they’re being overlooked.
Depending on the size of an organization, one obvious option is to outsource payroll functions. If the staff is small enough, farming out this specific task to a business or individual that provides bookkeeping and payroll services and expertise might make more sense than taking on the cost or training associated with hiring a full-time bookkeeper or HR staffer.
But many software solutions can make it easy to manage payroll and other HR functions in-house. Idealware spoke with a number of nonprofit HR professionals to learn more about the payroll options available to organizations and the features they should take into consideration when selecting one. Grouped by organization size, their recommendations follow.
For the purposes of this article, it’s worth noting that organizations above a certain size will have a Human Resources staff member or department, and it’s likely that they would use more enterprise-level software. Both are outside the scope of this article. For this topic, small organizations refers to a range from a couple of staff members to a couple of dozen.
Intuit’s Payroll Services
Formerly known as PayCycle, this affordable payroll option fully integrates with Intuit’s popular QuickBooks financial package, already in use by many small nonprofits. It’s based in the Cloud, which means there’s no software to install on office computers and maintenance concerns such as backups and updates are handled by the vendor. It not only processes payroll, but can also track benefits, employee demographic information, and compensation history, and could serve as a useful repository for employee data in lieu of a more sophisticated system. Intuit offers several different pricing packages ranging from $20 per month (plus $2 per employee) to the highest-end “Full Service” option, topping out at $79 per month (plus $2 per employee).
Another low-cost Cloud option, PayChoice (recently acquired by Sage Payroll Services) is geared toward small- to medium-sized organizations. The lowest tier option is a “self-service” solution that manages voluntary deductions, tracks vacation and sick leave, handles direct deposit and paycard payment, and can file federal, state, and local taxes. The “self-service” cost is $49.95 per month, with service limited to 10 staff members. Like Intuit’s Payroll, PayChoice integrates with QuickBooks. The more expensive version, which basically outsources the payroll process to the vendor, also includes HR functions including tracking of employee demographics, forms, performance reviews, certifications, skills and training, compensation history and online benefit enrollment. In addition, PayChoice includes phone, e-mail, or online chat access to on-demand HR consultants who can answer questions as they arise. The cost of the full-service solution can vary based on the size of the organization and the frequency of the pay cycle. For example, a full service customer with 11 employees and bi-weekly payroll would pay around $59 per processing.
Once an organization grows past a few dozen employees, it might be time to consider implementing a more advanced solution. Because nonprofits handling payroll in-house are more likely to also need to address other Human Resources needs, many payroll systems at this level are bundled with a wide range of HR tools.
ADP, the biggest name in payroll services, can provide the full suite of payroll functions through its Cloud-based system. It also has various optional HR modules to extend its capabilities by providing employee self-service and background checks, an optional time- and attendance-tracker for employees, and benefits administration that can help businesses stay compliant with Affordable Care Act requirements. ADP will work for organizations of any size, with pricing based on the number of employees and services chosen. Costs can range from about $100 per month for just payroll to thousands of dollars for more sophisticated HR functionality.
Sage 50 Payroll
Organizations that use the Sage 50 accounting platform (formerly known as Peachtree) can add on the payroll module for between $25 and $45 per month, depending on the number of paid employees. Sage 50 Payroll provides direct deposit, e-filing for taxes, and alerts to ensure taxes are filed on time. The Sage 50 accounting platform ranges in cost from $269 to $1,199 per year, plus the cost of the payroll module.
Paylocity Web Pay
Web Pay—Paylocity’s Cloud-based signature product—is focused on providing a customized payroll and HR solution powered by technological expertise. It allows customization for various features including general ledger and accruals, advanced report-writing, and integration with other software. Users can also create custom templates and checklists. Web Pay offers numerous self-service features for employees as well as support for third-party flex spending accounts. Pricing varies, but one organization said it paid $37.50 for processing plus $1.50 per employee for each of its more than 100 employees. The self-service portal is an additional per-employee fee, and various other fees may apply, including W-2 processing and choosing not to process a scheduled payroll.
For small organizations with up to 50 employees, Paychex offers three options for payroll submission and management. Users can phone, fax, or email payroll information to a local specialist, submit online or with a mobile device, or manage payroll in-house and online. Features include tax services, time and attendance, general ledger service, garnishment, online and hardcopy reports, pay options beyond direct deposit, and the opportunity to customize some other aspects of payroll service. More than one person said Paychex is known for its service. Pricing varies based on options, but is comparable to other systems already mentioned.
Looking Beyond the Basics
Regardless of the size of the organization, cost and ease of use are the top concerns when choosing a payroll system. But many experts interviewed for this article also mentioned the importance of finding a system that integrates with existing accounting and HR systems. In addition, they recommended keeping the employee experience in mind during the selection process—younger employees, for example, often expect mobile access and user-friendly interfaces.
Payroll is a basic function of every nonprofit, but the right software to manage it is often part of a bigger organizational solution. Looking beyond the basic functions of a system may be more in line with what an organization really needs.
A shorter version of this article originally ran in The NonProfit Times.