Wave Accounting Launches Wave Payroll in U.S. to Tackle SMB Payroll Headaches

Having launched the Canadian version in February, today Toronto-based cloud accounting company Wave Accounting announced the launch of its Wave Payroll solution in the U.S. Targeting the SMB market exclusively, the company believes it now has the simplest and most cost-effective payroll solution for businesses with 1-9 employees. It had 5,000 signups for the Canadian edition, and hopes to find similar success south of the border. To date, Wave Accounting has grown to a team of 80 staff and boasts over 400,000 users for its cloud accounting software, with 30,000 new users joining every month.

The payroll solution is available both as a standalone product and as a feature of its accounting platform. The company began working on the U.S. edition shortly after launching in Canada, taking into account the added complexity of payroll in the country. Scott Zandbergen, VP of Wave Payroll, and Craig Hurlbut, Director of Wave PayRoll U.S., spoke with BetaKit about the development process leading up to the launch. “In the U.S., it is far more complicated, we deal with payroll taxes at a federal, state, and local basis anywhere in the United States, and there are literally thousands of agencies that our clients may have to remit to in the U.S.,” said Hurlbut in an interview.

To tackle the complexity around payroll taxation, the software uses a company’s address to automatically set up the proper tax requirements. Using the software, SMBs can pay employees via check, or by direct deposit for no extra cost, in addition to handling vacation time, assigning payroll deductions, and providing a portal for employees to maintain their contact information and retrieve pay stubs.

“About 30-35 percent of our Wave Accounting customers have at least one employee, clearly showing us there was a market need in the very small businesses to build out a simple payroll solution to complement the accounting,” Zandbergen said. “Our real value in the payroll product is that it’s all about being ultra simple, the easiest solution on the market. Ease of use and usability is paramount.”

Wave Payroll is $5 per employee per month for the first five employees, and then charges on a sliding scale based on the number of employees, so 6-19 employees would be $2 per employee and over 20 employees would be $1 per employee. The company is hoping the price and design will help it put a dent in a market dominated by the likes of Intuit’s Quickbooks Payroll solutions, ADP, and PayChex.

“That pricing is especially favorable in the 1-5 [employee] market, where there are millions of small businesses, that’s something we feel really good about,” Hurlbut added. “We see an opportunity with a lot of seasonal businesses, and businesses that don’t have consistent payroll needs because their sales may be atypical or they may have contractors that are on again and off again.”

Wave PayRoll is one way Wave Accounting monetizes its core free accounting software, and it also makes money through targeted promotions. The company will be looking to integrate all its applications, move into the mobile space, and build out its line of products. With a large user base for its accounting services, the company has a good shot at converting a large percentage into customers for its payroll solution. With a sole focus on SMB, the company likely won’t take a piece of the payroll pie away from larger providers, but it should be able to find a niche with smaller, cost-conscious businesses.

Humayun Khan

Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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