For years, offering payroll services to clients had been the proverbial double-edge sword.

Once the process was implemented and any potential hazards were removed, the rewards in terms of revenue and client loyalty were evident - but on the flip side were the imposing tasks of keeping abreast of myriad changes in tax laws, rates and unemployment insurance, as well as adhering to the hornet's nest of compliance.

As a result, many firms shunned payroll as a component of their core client offerings and gladly outsourced the service to one of many capable providers who often bundled employee benefits and HR services with their payroll offerings.

But the past 18 months have, in many cases, reshaped firms' perception of providing payroll services, as practitioners scour the landscape for new sources of client revenue even as the economy slowly begins to climb back to its 2007 levels.

In fact, a recent survey has shown that nearly 80 percent of firms polled indicated that they planned to grow their payroll services through the remainder of the year and into 2010.

But the next 12 months harbor a number of potential ramifications on a quantum scale for payroll services, not the least of which are the potential effects of such sweeping legislative issues as health care reform. Other issues affecting payroll that have already been signed into law include the American Recovery and Reinvestment Act passed back in February, which reduces an employee's withholding.

Those complex nuances have influenced a number of firms to port over payroll to established providers, who are usually flush with personnel resources and research capabilities.

However, those firms that prefer to keep this burgeoning client service in-house have discovered the increasing presence of Web-based solutions that have made the task not only easier for practitioners but far more price-friendly as well.

That new influx of Software-as-a-Service payroll applications has also eased the job of firms in offering payroll services to their clients, and in particular paperless payroll.

Whether in-house or outsourced, payroll has become a value-added client service that an increasing number of practitioners are willing to embrace. As one veteran CPA remarked, "I already have their tax information - payroll just seems like a natural extension."

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