This blog post is in response to a thread on Founder Institute graduate email list. Several grads asked me to share my experience shopping for Payrol and HR services. To avoid starting a discussion on the list, I summarized it here.
Overall, it appears that payroll service is a commodity. Features like seamless integration with QuickBooks is available from any well known payroll provider. After hearing some horror stories about working with small local providers, I decided to look only at the established ones. I reached out to Intuit, TriNet, Paychex and ADP. Below is the summary:
Intuit – just payroll, no HR, not health insurance, no workers comp. Once you add tax reporting, the price goes up over Paychex and closer to TriNet.
Paychex – definitely the best price option. The problem was getting the insurance, and HR stuff from them as well. They outsource all non-payroll services to other companies and so I had to talk to several different people and get separate quotes for their services (health insurance, workers comp, and quaterly payrol tax reports). The insurance options were not flexbile enough for us and were more expensive than TriNet. On top of that we would have had to wait six weeks before starting the health insurance coverage and we would all have had to choose the same provider, which didn’t work for us, because our employees are in two different states. The person who was giving us the insurance quote did not make it easy to understand different options, which resulted in several extra phone calls and emails. Paychex also hooked me up with an accounting firm. However, the accounting firm was in San Jose and we are in San Diego, so we decided to work with a local firm that was recommended by a local mentor from Founder Intitute.
ADP may have been a good option, but I never got to talk to them. The sales rep called me a week after I submitted the quote request online and by then I did not want to spend time on another quote. Also, I heard a couple times that they tend to screw up payrolls a lot, which is not something I wanted to deal with either.
TriNet is the most expensive option. However, in the end we chose TriNet because they seemed to be more on top of everything, more responsive and offered more flexible insurance options. If I knew more about Payroll, HR, insurance and taxes, and had more time, I would have probably chosen a cheaper service or a combination of several cheaper contractors. However, I am a tech-CEO and any minute I spend on that stuff is a minute I am not spending on moving the product forward. The key with TriNet was that they were able to get everything running in a couple of days with minimum of my time. Their people were able to work directly with our employees and our accountant to explain the insurance options, payroll and HR stuff.
Another important factor was that TriNet’s health insurance options were way more flexible and cheaper than what we were offered though Paychex and we did not have to go through separate company to negotiate the insurance options. Added bonus was also that we could start the coverage right away and not wait 6 weeks. Working wiht them was a huge time savior and the price difference was compensated by cheaper health insurance group plans with better coverage.