Though among the least complicated computing applications in the accounting marketplace, payroll software and services continue to set the trends in both utilization of advanced technologies and business development for accounting firms.Payroll was one of the first practice areas to make a strong move toward the Web-based application service provider model. It was one of the first to encompass non-traditional practice areas, such as human resources and 401(k) plan management, enabling accountants to expand their services to clients. And it was one of the first areas to recognize the dangers of bypassing accountants in an effort to sell directly to small businesses - payroll systems and services now are almost all directed to using accountants as a primary channel to reach SMB customers.

2005 is the year in which payroll again will set the pace for a major new trend - security. With massive data breaches occurring on almost a weekly basis, regulators and legislators are considering whether new laws are needed to safeguard the personal information of consumers. Since payroll applications collect and use the very information being sought by identity thieves, payroll software vendors, service bureaus and Web-based services are in the middle of a massive effort to harden their defenses against intrusion and provide additional data safeguards.

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