Payroll Processing
Payroll run on time, taxed correctly, and booked to the general ledger properly — job-costed where it matters, reconciled every cycle. Not just paychecks that clear, but a labor cost line a buyer can trust.
Why payroll is bigger than the paycheck
For most operating companies, payroll is the single largest expense line — and the single largest compliance trap. By some estimates, roughly one in three small businesses incurs a payroll tax penalty in a given year: a missed deposit, a late state filing, a contractor who should have been a W-2. The IRS doesn't send warnings; it sends notices with interest attached.
But the part almost everyone misses is that running payroll is only half the job. The other half is how it lands in the books. Payroll dumped into one lump "Wages" line — no split between direct labor and overhead, no employer taxes matched to the period, no job or division tags — quietly destroys job costing and gross margin visibility. When a buyer's QoE team can't tie labor cost to the work that consumed it, they don't give you the benefit of the doubt. Miscoded payroll is EBITDA you can't defend.
The goal is a level, boring, repeating rhythm: same steps, same dates, same journal entry, every cycle. A process that repeats 26 times a year and still produces surprises isn't unlucky — that variation is pure waste, and it compounds into penalties, misstatements, and re-work at exactly the moments you can least afford them.
What's included
- Payroll runs administered on Gusto — setup and migration included
- Employee & contractor classification kept clean (W-2 vs 1099)
- Multi-state registration and filings handled
- Payroll journal entries booked correctly to the GL, every cycle
- Labor job-costed to jobs and divisions where the business needs it
- Benefits & 401(k) deductions reconciled through clearing accounts — not left to rot
- New-hire and termination processing
- Year-end W-2s and 1099s
How Kaizen runs it
Gusto handles the mechanics — direct deposit, tax deposits, filings. The Kaizen layer is what happens between Gusto and your financial statements: a standardized payroll journal entry that posts the same way every cycle, clearing accounts for benefits and 401(k) reconciled monthly, and labor mapped to jobs and divisions so the P&L by job actually means something.
That's the Standardize and Sustain discipline applied to the one process your company repeats more than any other. The entry is documented, so it produces the same output no matter who runs it. The reconciliation cadence catches drift before it compounds. Twenty-six cycles a year is twenty-six chances for a defect — or twenty-six repetitions of a process that gets a little sharper each time. We build for the second.
Pricing
Frequently asked questions
We already use ADP or Paychex — do we have to switch?
Not necessarily. We can run the GL side — the journal entries, clearing accounts, and job costing — on your existing provider. But Gusto is where we standardize, and for most companies under a few hundred employees the migration is painless and the platform is cheaper.
Can you handle multi-state or remote employees?
Yes. State registrations, state filings, and local taxes are part of the service — including the new-state setup when you hire your first remote employee somewhere you've never had payroll.
How does payroll tie into job costing?
We map labor to jobs and divisions at the payroll-entry level, so your P&L by job includes its real labor cost — not an allocation guess made at year-end. For service and project businesses, that's usually the difference between knowing your margins and estimating them.
What about our PEO?
If a PEO makes sense for benefits, we work alongside it. What we handle is how the PEO invoice lands in the books — split into wages, taxes, benefits, and fees rather than one opaque lump — which is exactly where most PEO clients lose visibility.
Related services
Free 20-minute books assessment
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