With better payroll software and enhanced payroll service bureau offerings, payroll has become one of those applications that you embrace one way or another — whether directly, with a third-party provider, or through referrals.

And now payroll is boosting its profile yet again. There are several reasons for this increasing importance and focus. One major reason is an increasing complexity in benefits administration. In recent years, even smaller businesses have seen an uptick in not only what kinds of benefits are available, but what benefits are expected. Health care has also added an increasing complexity to both benefits administration and payroll, and while the Affordable Care Act may or may not actually make health care affordable, it most definitely makes it more complex.

One area that’s increased in importance in recent years is melding payroll with back-office accounting. In the past, payroll has often been looked at as a stand-alone application, but in reality, it has to tie closely with several other areas of management systems.

We wanted to know how and where payroll is changing, so we went to the source — eight vendors that either offer payroll software as an application for your clients to implement or for you to offer payroll services to your clients, or payroll service bureaus. We asked these vendors how payroll is changing, where it’s being integrated with other applications, and how regulatory and compliance issues are affecting the application.

Our vendor panel included Sharada Bhansali, executive vice president and co-founder of AccountantsWorld; Scott Schreier, senior director of accountant channel marketing at ADP Small Business Services; Pete Koblinski, marketing manager for CYMA Systems Inc.; Philipp Suchan, product marketing for Gusto; John Reinke, CEO of MyPayrollHR.com; Andrew Childs, vice president of marketing at Paychex; Steve Kania, vice president of product management and strategy at SurePayroll; and Louie Calvin, product manager for accounting and payroll at Thomson Reuters.

 

PLAYS WELL WITH OTHERS

The integration of payroll with other facets of financial accounting is nothing new. Integrated accounting systems such as those from CYMA Systems, Thomson Reuters and others have always considered payroll as an ancillary application like accounts payable and receivable, and inventory.

What is fairly recent, however, is payroll service providers working hard to integrate their offerings with popular accounting products. To some degree, this integration is being fueled by the increasing popularity of cloud-based accounting software.

“Gusto provides modern API integrations with leading cloud solutions for small businesses,” Suchan told us. These include a range of banking partners; accounting software offerings; time-tracking applications; and HR solutions.”

MyPayrollHR.com and SurePayroll are two more cloud-based payroll service vendors. Both of these offer extensive integration with other cloud-based applications. According to SurePayroll’s Kania, “Small businesses have always needed various integrations. It used to be very much based in a desktop environment and required a lot of clunky downloading and uploading. Now it’s seamless and everything is handled online. All of this is progressing very quickly. ... The end user has a lot of options and it’s very easy to pick and choose which ones work for them.”

MyPayrollHR.com’s Reinke lists among its integrations several time and labor management systems, applicant tracking systems, onboarding systems, ACA monitoring and reporting systems, and HR and benefit management systems for insurance brokers.

And while AccountantsWorld’s Payroll Relief is part of a comprehensive suite of accountant-oriented applications itself, it also provides comprehensive integration with these applications, as well as time clock data from Advantek and Swipeclock, and workers compensation data from InsureLinx.

Back-office integration is also an important area for Thomson Reuters. “Back-office integration points include ACH direct deposit integration for transmission of direct deposit files, payment alternatives with multiple pay card providers, multiple partners for pay-as-you-go workers compensation insurance premiums, and integrated forms and check stock references in the software to assure alignment and accuracy,” we were told by the vendor.

Fueling this tighter integration is the realization that payroll is closely intertwined with benefits administration, human resources, time-keeping, time & billing, and, to some degree, expense management.

AccountantsWorld Payroll Relief incorporates such human resources capabilities as tracking paid time off. PTO hours can be accrued per pay period, month, year, hours worked or regular hours worked.

Gusto is yet another payroll vendor offering what might be considered HR functionality in its payroll. “Gusto helps small businesses with many everyday human resource tasks such as complying with new hire reporting and mandatory time-off requirements for each state. Employee self-onboarding saves employers time because employees can enter and edit their personal details online. In addition, employees get lifetime Gusto accounts. This means they can access their paystubs and W-2 forms online, even after they leave your team,” Suchan said.

And other payroll service vendors offer even more functionality in the area of HR. ADP’s Schreier points out that their small-business HR solutions include, but are not limited to, HR management solutions and time and attendance tracking. “We also offer retirement solutions including 401(k) plans and SIMPLE IRAs, an employee handbook wizard, a helpful applicant tracking solution in ADP Hiring powered by GetHired.com, and an HR help desk staffed by HR business advisors,” he said. But payroll and HR aren’t all that ADP has to offer: “Through an affiliate, we offer access to insurance plans and solutions for workers’ compensation, business insurance, and health and benefits.”

Thomson Reuters is yet another vendor with HR features in its payroll offerings. Calvin noted that users of both the myPay Solutions and Accounting CS Payroll benefit from a wide variety of features found in most human resources software feature sets, including a payroll-administration-specific user interface for on-boarding new staff and employee self-service access to their own portlet for updates to their demographic data and status.

And that brings up the increasing availability of portals, another place where payroll and human resources are evolving. With these applications, client employees can access a variety of information. For example, AccountantsWorld’s Bhansali pointed out, “Employee portals are increasingly popular, as they enable employees to securely access and print their own pay statements and W-2s or 1099s, and maintain addresses and other personal information themselves.”

Thomson Reuters’ Calvin agrees with the importance of providing easy access to payroll information. “In spring of 2015, myPay Solutions began to transition customers to a new client-facing interface called myPay Solutions Direct, which connects accountants and myPay Solutions with their clients by providing shared business tools and real-time access to relevant data.”

 

INSIDE THE ACA

Compliance has always been an essential component of payroll. And even areas that may fall outside the direct province of payroll wind up being roped into the payroll process. “Payroll and human resources are separate modules in the CYMA system,” Koblinski told us. “However, they share information including employee data. Workman’s comp is handled directly in the Payroll module. Benefits can be established and accrued in Payroll, though eligibility is handled in HR. Affordable Care Act recording and reporting (Forms 1095/1094 B and C) are available, and included, in the Payroll module.”

The Affordable Care Act is far from the only compliance issue that accountants have to worry about. “ACA calculation, recordkeeping and reporting requirements have had a significant impact on our clients’ administrative responsibilities,” ADP’s Schreier told us. “What could arguably be the next biggest challenge after the ACA is the Department of Labor’s proposed rules to increase the standard salary level for executive, administrative and professional (‘white collar’) exemptions and the minimum total annual compensation level for the ‘highly compensated employee’ exemption in the regulations implementing the Fair Labor Standards Act.”

Paychex’s Childs also sees this as a point of concern. “From a regulatory standpoint, the impending changes to the Fair Labor Standards Act and the Small Business Efficiency Act are certain to impact the payroll industry.”

And Thomson Reuters’ Calvin notes that, “While it’s a distant second to ACA, everyone in the payroll service business must keep their guard up to protect from scams and fraudulent activities. ... Finally, accelerated W-2 reporting and accelerated state filings are significant trends.”

 

THINK OF IT AS AN OPPORTUNITY

It’s a fact of life that payroll and its associated applications, such as HR, are becoming more complex. That means more work on your part to keep current and knowledgeable. But it also means greater opportunities to serve your clients, both with payroll services and with the knowledge that they need to make the right decisions.

And all of the vendors we surveyed provide mobile access to at least some of the functionality of their applications, making it easier to get the client and their employees involved in the payroll process. Thomson Reuters’ NetClient CS is a good example. With an iOS or Android device, employees can enter and complete time for the current pay period, view and print copies of paychecks, and view and edit W-4 information at any time. Other vendors offer similar functionality within their products.

Vendors are also working hard to add new features, and more value, to their applications and offerings. “We’re preparing to announce the integration of expense management into the Paychex Flex platform, adding yet another piece of important functionality that businesses need today,” Childs said.

Much of this evolution provides new opportunities for accountants. SurePayroll’s Kania said, “Accountants are seeking to be more consultative with their clients. They’re helping small businesses with strategy, so they’ve gravitating towards offering payroll and benefits because it gives them more insight into how they can improve their clients’ businesses.”

Throughout this article, we’ve concentrated on software and application providers. There is one other provider area we haven’t touched on, but that should definitely be considered in your search for payroll answers. Thomson Reuters, Wolters Kluwer, Bloomberg BNA and others provide research, analysis and reporting services on payroll and HR topics. Given the increasing complexity of these as well as benefits analysis and administration, a subscription to one or more of these services might be an excellent companion to whatever payroll route you decide to take.