Intuit's relatively inexpensive (a flat fee of $30 per month) Web-based payroll preparation service is aimed at businesses that don't use its popular QuickBooks application. To set up Online Payroll, you complete a questionnaire and then take a guided step-by-step tour through the service to pay employees, pay taxes, and file tax forms.

Online Payroll offers 13 types of compensation, from the most common (salary and hourly) to specialized pay types such as piecework, commission, and tips. You can adopt any of four pay intervals: weekly, biweekly, twice per month, or monthly.

Like PayCycle's competing Payroll Plus 2008, Online Payroll lets you print paper paychecks and pay stubs, and deposit net pay electronically into employees' bank accounts. Both services also maintain current tax tables, calculate gross pay and deductions, compile your pay and tax records, and can help you prepare your payroll tax forms at filing time.

But Online Payroll provides tax forms for only 19 states; if your state isn't among these, you'll have to complete the state tax forms manually. Also, Intuit Online Payroll doesn't integrate with QuickBooks or any other small-business accounting software. As a result, you'll have to prepare a manual journal entry after each payroll to specify the payroll and deductions in your accounting records.

This requirement is fine for businesses that keep their books manually, but it's a significant drawback for businesses that use accounting software. Intuit offers other payroll programs--including Basic Payroll and Enhanced Payroll--that do integrate with QuickBooks.

Despite its shortcomings, Intuit Online Payroll is cost-effective and easy to use.