Square Launches Payroll, Expanding Suite of Services for Small Businesses

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As part of its push to become a comprehensive platform for small businesses, Square has launched a new payroll management service this week. The product, which officially launched in California Tuesday after months in beta, is targeted particularly at SMBs that pay employees on an hourly basis, but it can also be used for those that have salaried staff.

The move is the latest indication that Square, which raised $100 million in May and is rumored to be nearing an IPO, sees its future as a one-stop-shop for small business software and tech needs — taking over a wide range of functions not traditionally managed by payment processors.

The new payroll service allows employees to clock in and clock out digitally — and then, come pay day, business owners can import those hours, approve them, and send payment. The tool supports self-onboarding and lets employees set up direct deposit to their accounts. The service currently costs $20 per month, plus $5 for each employee paid.

Lauren Myrick, the company’s director of merchant products says that the service was inspired by insights from merchants already using Square’s other services: “We’re always asking merchants where the biggest pain points are and where they’re spending the most time so that we can help,” Myrick told Street Fight. “One of the themes we’ve been hearing is how complicated it is to hire and pay employees.”

Among the new product’s most defining characteristics — and the feature with which it intends to give companies in the payroll space a run for their money — is that it handles all tax and withholding calculations, automatically processing and filing documents on behalf of the business, so that the onus is removed from the owner. “Oftentimes people think that they’re signing up for a full service payroll solution but then are on their own when it comes to tax filings and payments,” said Myrick.

The move is another step toward the company’s attempt to consolidate payments and financial services for small businesses. Square’s most recent fundraise in May was justified in part by a desire to expand its small business loan program; the company also offers peer-to-peer payments and instant deposits for merchants. The company also recently announced a new card and phone reader that was updated to allow businesses to accept Apple Pay and process the new EMV chip credit cards that are becoming widespread.

Steve Ziganti, owner of Bay Area wine and spirits shop 3 Steves Winery, told Street Fight that he’s been using Square’s POS system for a little over two years, and signed on to try Square Payroll when it launched in beta last year (where it was being used by over 600 business and 2,000 employees). At the time, his business was expanding and he was shopping for a payments solution.

“I was going to use the same solution my wife was using for her real estate office, which I believe was [Intuit’s] Quickbooks, when Square came up and did a quick demo. It was like a gift, so we started using it.”

Ziganti says he’s been impressed by how little time Square Payroll takes.

“All I have to do is open time cards, import time cards, and then hit pay and automatically everyone is paid, taxes are withheld, and the money drops from my account into theirs,” Ziganti says. “I just did payroll now while on vacation. It took me all of five minutes and I paid some 20 people.”

Simplicity and transparency for SMBs is very much the ethos of Square, even as it adds to a suite of products that don’t seem particularly cohesive. Aside from payments and loans, the company has made pushes into a range of seemingly divergent areas like food delivery, with its acquisitions of Caviar and Fastbite, and has launched an App Marketplace to integrate seamlessly with other small business services.   In April, the company also introduced Square Marketing, an email marketing tool intended to help SMBs stay in touch with their customers.

“We ask ourselves: ‘Why is this a certain way?’ If it doesn’t make sense to us, we start with a blank slate and hold ourselves to the bar of building what we think should exist in the world,” said Myrick.

Nicole Spector is a contributor to Street Fight.

Related Street Fight content:

A Window Into the Office Culture at Square, From SFO to Tokyo
Behind the Counter: Why a New Coffee House Picked (and Stayed With) Square