Mobile payment startup Square has been gradually building out the products it offers to small businesses to position itself as a one-stop shop for their various front-of-house and back-office needs. Today sees the latest development on that theme: the company has launched Square Payroll, software for businesses to pay and track taxes and other costs for both hourly and salaried employees. The product, initially available only in California, is priced at $20 per month, with $5 per employee on top of that.

Square Payroll is out officially today, but it’s been in testing for a while: it was spotted as far back as last September, being tested at a price point of $10/month among select businesses in California.

The live product will also be available only in California at launch, but the plan is to expand it to more states soon.

In terms of payroll software, Square is positioning itself — at least for now — as a fairly simple product (those line drawings in the video below are not misleading).

Square Payroll is entering a pretty crowded market, competing against the likes of Intuit’s Quick Books, ADP, Paychex and others. A few, like Wave Accounting, offer some but not all the same features: Wave, for example, doesn’t handle tax payments or tax filings — they estimated tax liabilities. It is also less expensive. It starts with two base tiers of $10 and $15 plus $4 per each employee.

Square Payroll includes timecards, taxes, and the ability to track and pay both salaried and hourly workers, and its price is all-in.

It’s a smart idea and there are a couple of clear advantages for Square to build and offer a payroll product.

For current customers, it becomes one more way for Square to tie them to its service, and to make more margin out of those users (important since payments alone are a very thin-margin service when you consider the other parties in the chain that also take cuts).

It’s also a way of potentially snagging new customers for the startup, which is currently one of the leaders in its category but competing strongly against the likes of PayPal and others.

Other services and products that Square has rolled out to service small businesses beyond basic payments and hardware to take payments include Square Cash for cash advances, Square Capital for financing, appointments scheduling, analytics, online stores, preordering and more.

Square itself is also going through an interesting time. It’s co-founder and CEO, Jack Dorsey, is now putting in some moonlighting hours as the interim CEO at Twitter — a job some believe he’s angling to take on permanently, which could leave Square out of shape for a while.

All the more reason to add some reinforcements to the platform by way of a new service, and to keep pressing ahead with its growth.