It’s official, but not all that surprising: Zenefits is launching its own payroll processing service for small companies.
The employee benefits company, which needs payroll information for its core services, has been using data gathered from services sold by partners such as ADP, Intuit, Paychex, and Gusto (formerly ZenPayroll). The new service reduces its reliance on those companies. The basic edition is free, but there’s a monthly charge of $25 per month, plus $4 per employee per month, for more sophisticated features such as customized payroll deductions.
“Maybe the best way to think of this is—Zenefits isn’t launching a payroll system; we’re upgrading our service so that it can pay your employees and file your taxes for you,” the company writes in its blog. “It’s not a separate system—it’s deeply integrated into everything that we already do.”
Zenefits began working on the service in the early summer after a bitter dispute with ADP (ADP). At the center of the fight was ADP’s decision last spring to disconnect Zenefits’ access to payroll information for its small-business customers—at least temporarily. When Zenefits CEO Parker Conrad complained in characteristically strong terms, ADP sued the startup for defamation. The suit was dropped in late October.
Last valued at around $4.5 billion, Zenefits is targeting $100 million in sales this year. That goal was called into question last week by a report in the Wall Street Journal, which suggests that the startup is paying far closer attention to expenses than in the past.
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