ZenPayroll, a software startup that launched in late 2012, now has 10,000 customers using its payroll software, a sign that more small businesses are moving their HR operations to the cloud.
The San Francisco-based startup announced Wednesday morning it had hit a milestone of 10,000 active customers, signaling one of the fastest growth rates among companies selling software to small- and medium-size businesses.
It s still just a the tip of the iceberg in terms of where we want to be, said Josh Reeves, CEO and Co-founder of ZenPayroll. But it is a milestone because we launched just two years ago, and we re fairly new, so this shows the potential.
ZenPayroll, the brainchild of Stanford University students, sells comprehensive payroll service software that businesses can run on any web-enabled device, including a smartphone. The software automatically processes government payroll taxes and reporting. The goal, said Reeves, is to give small business owners who are processing payroll by hand more time to dedicate to building their company, rather than fumbling with burdensome paperwork. About 40 percent of small businesses still complete their payroll by hand.
That can cause problems: One-third of the six million companies in the US that have employees and pay them are fined every year for errors in payroll, Reeves said. Because ZenPayroll handles all local, state and federal taxes – business owners must juggle some eight or nine different tax reporting requirements — employers are less at risk of facing penalties if they use the software, Reeves said.
There s so much pain, and software can clearly do this better, Reeves said. Payroll is all about rules, and software is better at following rules than people.
The company has customers in 38 states and plans to have a presence in all 50 by the end of the year. The largest portion of ZenPayroll s customers are tech companies (they make up 15 percent) but the startup serves a wide variety of businesses, from construction companies to salons and health clubs.
ZenPayroll charges business owners $25 per month as a base subscription fee and an additional $4 per employee per month.
The startup has raised $26 million from venture capital firms including Kleiner Perkins Caufield & Byers, General Catalyst and Google Ventures; and from CEOs of top-tier Silicon Valley companies such as Yelp, Dropbox, Evernote, Instagram, Eventbrite, WordPress, Instagram, Box and Stripe. The CEOs serve as advisers, Reeves said. While ZenPayroll will continue focusing on selling to small businesses with up to 100 employees, the funding will help it expand to larger companies of up to 500 employees.
Photo courtesy ZenPayroll
