Payroll Outsourcing Company Reviews

PayCycle Payroll Service Review

We review PayCycle's payroll service and find that it is lacking a few features that we believe are essential to a good payroll outsourcing solution.

PayCycle touts many benefits that are common to their main competitor in online payroll services, SurePayroll.

The PayCycle home page boasts the following key benefits for payroll outsourcing:

  • Process payroll online in minutes
  • Pay employees & payroll taxes
  • Instant checks, direct deposit & W-2s
  • No desktop software hassles
  • Low monthly fee

While it looks like PayCycle has a great service, you'll need to be careful when comparing PayCycle with other payroll services.

That's because PayCycle offers a seemingly very affordable entry-level payroll service that does not include many essential payroll outsourcing features.

Notably, their lower cost payroll service, PayCycle Basic, does not support payments to 1099 contractors or even handle state payroll taxes. That's a bit like selling a car with three wheels. It might be drivable, but it's not going to do what you need it to do.

In evaluating PayCycle for our payroll service review, we think it's only worthwhile to focus on PayCycle Payroll Plus, the top of line payroll service at PayCycle.

For PayCycle Plus, the price is $42.99 per month for up to five employees. Each additional employee is $1.50 per month.

You find PayCycle's true pricing out after clicking on a promotion that offers a free month and two months at $9.99. That's fairly ingenious marketing on PayCycle's part, but it's not something smart small business owners should fall for. The real payroll service pricing is $42.99 per month for five employees. With the promotional offers, they are counting on your signing up and going to the trouble of processing a few payrolls with them. Once you've invested all the time in setup, it's not likely that you'll switch payroll services. Payroll is a very sticky industry for the most part, with churn only when customers are dissatisfied.

The value of your time alone is worth that $109 savings (1 free payroll at $43 plus 2 $33 discounts). For $109, it's not worth it to go with a payroll service that might not be right for you.

And, that's really where we end up on PayCycle. It's right for some small businesses and not for others.

If you have five or less employees, PayCycle may be a fit. For more than five employees, we would recommend taking a closer look at SurePayroll, ADP and PayChex.

But the number of employees is not the main factor.

You should factor in what you are not getting from PayCycle.

PayCycle is essentially an online service that facilitates your processing payroll. In contract, SurePayroll is an online service that processes payroll for you.

Think of PayCycle as a reminder service. If this were all about landscaping, rather than payroll processing, the difference would be easy to understand. PayCycle would remind you to cut the lawn, whereas SurePayroll would cut the lawn for you.

Don't get us wrong. PayCycle is a great payroll service if you are a do-it-yourselfer. They've automated many of the payroll tasks that would otherwise be a big headache. For example, their built-in payroll calculator will figure out all the right withholding amounts. They also send you email reminders when it's time to process payroll.


In some cases, they will take you very close to that level of service by giving you access to electronic filing services enabled by the government. This helps you avoid filling out state and federal payment coupons by hand and taking them to your bank. You still have to remember to click the electronic filing button and you need to accrue the funds to make the remittance. If you forget to file or have not saved up enough money to remit, you are in for IRS penalties and IRS notices. No fun!

In contrast, SurePayroll's online payroll service files your taxes automatically and the company even represents you if issues arise with the IRS.

It also does not appear that PayCycle supports electronic filing in all states. We saw one reference on their site that suggests state payroll tax electronic filing is only available in 25 states, leaving half the nation high and dry as to their ability to process state payroll taxes in an efficient manner.

Despite some of the negatives we've identified in PayCycle's offering, we view it as a solid payroll solution for some small business owners. You just have to understand exactly what you are buying before you buy. Very small businesses can use the service as long as the owners are financially responsible and self-disciplined.

The company was founded by two former Intuit employees who spend a lot of time making sure that PayCycle end users can efficiently use this Software-as-a-Service (SaaS) payroll solution. The company is good at software development, so you won't be unhappy with PayCycle's offering being hard to use or overly complex.

As such, PayCycle has earned several awards for its solutions from publications such as CPA Technology Advisor, Accounting Today, and PC Magazine. They won PC Magazine's prestigious Editor's Choice award in 2006 but then lost it to SurePayroll in 2007. Based on our reading of the reviews, PC Magazine gave the edge to SurePayroll in 2007 because of their owning the tax filing and remittance issue.

On the plus side, PayCycle Plus gives you direct deposit, state forms, 1099 contractor support, free weekend support and integration with several accounting packages.

It's worth calling them up but, remember, it's important to compare apples to apples...and don't fall for those promotional prices on the home page.

We recommend that you never sign up for any payroll service after calling only one vendor. Call at least three vendors and ask them directly "Why should I use you instead of X?" After gathering all the facts and all the pricing, take at least three days to make a decision. Allocating that timeframe into your payroll outsourcing selection process ensures that you will make rational decisions based on what's best for your business.

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Help us with this PayCycle payroll service review. Please submit your comments below. Thanks!

  • Jess posted on 5/31/2009
    This article is amazing! I am thinking about starting my own business and am trying to get all the information together for everything first. Payroll processing is a very scary thought for me and this article has given me lots of good pointers and things to think about!
  • paycycle user posted on 7/17/2009
    paycycle user
    You are incorrect about your 1099 statement, they do offer support for payments to 1099 contractors and they do have all the forms state payroll taxes that you print and file. Good system maybe doesn't have all the bells that some other more expensive systems does have. Paycycle is a huge time saver for small business.

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