Ben Franklin is credited with saying that the only sure things in life are death and taxes, so there's probably not going to be a way to make the payroll application pleasant. But the right software or service provider can make a big difference in both your clients' experience and your practice. There's no big secret - it's just a matter of helping your clients match their needs with the cost and capabilities of the available solutions.
For the most part, payroll is a fairly generic application. Where things get interesting is when a client's payroll strays from the generic. Some employees get paid at different rates depending on what tasks are performed. Employees in service positions who are expected to receive tips need the tips to be included in the taxable gross pay. There may be deductions for health insurance, 401(k) or profit-sharing plans, cafeteria plans, and many others. And, unfortunately, in these tough economic times, garnishment is increasingly becoming a common deduction.
Most payroll systems are able to accommodate many of these conditions (and more). But how easily the system can handle specific types of less common requirements is very much worth investigating.
Also important is who is going to be responsible for calculating the required tax depositories, as well as making them. The client? You? A service bureau? Does the payroll vendor offer a direct deposit option (most do) and what will it cost? Can the system print checks on blank stock and add the required MICR coding on the bottom? MICR is actually becoming less common in these days of increasing direct deposit, but if you will be doing the check printing for a number of clients, not having to warehouse separate check stock for each client can be a factor.
Finally, depending on what industry your client is in, they may be best off with a vertical solution that is geared towards the unique requirements of their particular industry. For example, construction payroll systems often allow an employee to be paid at a wide range of rates in the same paycheck. It's common in this industry for an employee to have 10 or 15 different pay rates as they move from one task to another. Union reports are also a common requirement. You might be able to find a more generic payroll system that will accommodate some or most of these needs, but they usually won't be addressed as completely as in a vertical solution.
HERE, THERE OR EVERYWHERE
One of the more important decisions, and one that should be made up front, is who is actually going to perform which payroll-related tasks. In many cases, a client doesn't consider who is going to do data entry and answer employee questions until the payroll system is up and running. At that point, everyone is scrambling.
There are advantages and disadvantages to different scenarios. In many cases, the best approach is to leave the payroll data collection and employee contact to someone in the client's company. Dealing with the client's employees is a no-win situation. If you have any doubts, consider how crazy your own staff can drive you.
Other than that, it's really a toss up where and by whom the payroll gets done. There are numerous solutions for the client processing the payroll partially or completely in-house, or outsourcing it to you or a service bureau. The same holds true for your practice. You can purchase payroll software that allows you to operate as a service bureau, or work with a payroll service bureau that works with your practice as a middleman.
WORDS TO THE WISE
You've heard it from us (and others) before - make sure that you (and/or your clients) are backed up any time an employee change is made, a depository is made, and a payroll is run. Payroll is exceptionally mission-critical, and you can't back up the data files too many times, or in too many places.
To help you and your clients decide the best approach, we looked at six payroll solutions. These are just a drop in the bucket, but serve to illustrate a number of different ways that are available. We did not include software that allows your practice to operate as a service bureau. These applications are available from a number of vendors, especially those vendors, such as CCH and Thomson Reuters, that specialize in accountant-oriented applications. We were also not able to include Paychex in this roundup, as they were in the midst of a major system upgrade. If not for that, they would have gladly participated. Where we could, we've indicated pricing information. In general, service bureaus prefer to quote directly to the potential customer.
Payroll Relief is a service bureau payroll, run on AccountantsWorld's servers, but only provided through an accountant. It is designed to let an accounting practice set up a service bureau for its clients without having to actually install and run software. You set up the client on Payroll Relief and enter the client's payroll data for a pay period, or provide access for them to enter the data. AccountantsWorld will then process it and generate the payroll and reports. You or your client can then print checks or have AccountantsWorld perform direct deposit of the employee's pay.
You can also generate payroll reports for the client in-house at your practice and e-mail them to the client. The amount of client access to the Payroll Relief system is set by you, and can be different for each client. As far as the client is concerned, they are dealing with you, not AccountantsWorld.
The Payroll Relief system itself is nicely designed and implemented. Menus are intuitive and data entry screens are easy to use. There's a useful dashboard that shows the status of the relevant tasks for the employer that you are working on, and there's a Payroll Management Center that helps you keep track of where you are with each client's payroll.
The employees aren't forgotten - there's a portal where your payroll clients' employees can make personal changes like addresses, as well as view and print pay stubs and W-2s.
Payroll Relief is pretty much a standard service bureau offering, which is not at all a bad thing. It can handle multi-state, multi-location and multi-departmental payrolls, and provide direct e-filing of tax forms and depositories. You can also print signature-ready forms for a client if they would prefer not to e-file. Reports are understandable and useful, and Payroll Relief supports MICR check printing, which means that you don't have to maintain a huge inventory of different check stocks.
There are two different pricing options. You can pay per pay period, or pay per check generated. If you aren't already a subscriber to Website Relief, which is AccountantsWorld's Web hosting service, there is an additional charge of $195 per year for the Payroll Relief Application Platform.
If you are looking for a quick and simple way to get into the payroll service market, take a long look at Payroll Relief.
Thomson Reuters' myPay Solutions comes out of the former Creative Solutions, which Thomson acquired quite some time ago and whose only recognition is the naming of its former Creative Solution products as the CS Professional Suite. That division has offered an in-house service bureau app for years, targeted at accounting practices that wanted to be able to run payrolls for their clients.
MyPay was established to provide an outside service bureau to both accountants for their clients, and to the corporate public at large. The thrust of myPay Solutions' message is that many practices have clients that need their payroll processed. Those clients that your practice can comfortably handle can be processed in-house in your practice using Payroll CS. Those whose payrolls you are not comfortable processing can be handed over to myPay Solutions. By acting as a "partner," your practice will receive 10 percent of the revenue generated by that client.
Unlike some of the other payroll service bureaus, myPay Solutions does not brand its services with your firm's name. Rather, it relies on your relationship with your client to motivate the client to use them as their payroll processor.
The benefit to your practice in partnering with myPay Solutions is that you get to decide whether any one particular client should be processed in-house in your practice or would be better served by using an outside service bureau. Payrolls processed by myPay Solutions can be directly imported in Write-up CS or QuickBooks, and as the client's accountant, you can have access to all or selected payroll reports for that client.
The payroll system that myPay Solutions offers is similar to that provided by other online service bureaus. The former Creative Solutions has been offering an in-house application for processing client payroll for decades, so they've had plenty of time to get payroll down pat. The data entry screens are not overpopulated, and the system is easy to navigate - important factors for your clients, especially those with high turnover rates in the payroll department. It offers 10 standard reports, somewhat less than most other vendors, and your client can choose either five reports, or eight reports of the 10, depending on what level of service they sign up for. The level of service (Premium Package or Premium Plus) also determines how the payroll is entered -through a Web portal or through fax or e-mail submission. Direct deposit is standard with both packages.
MyPay Solutions is smaller than many of the established payroll service bureaus, which may be a consideration. But the fact that you can deal with Thomson Reuters for both in-practice payroll servicing or an outside vendor for some of your clients may also be a motivating factor.
Peachtree Select Payroll
Sage North America
Peachtree and Intuit's QuickBooks pretty much own the entry-level accounting market, with millions of small businesses using one or the other's software.
Peachtree offers three payroll products, Peachtree Simple Payroll, Peachtree Managed Payroll, and the one we reviewed, Peachtree Select Payroll. Two of these, Simple Payroll and Select Payroll, are desktop solutions with the core functionality contained in the accounting software and unlocked through an unlock code from Peachtree. The Peachtree Managed Payroll puts Peachtree in charge of calculating the payroll and maintaining the software. Two of the three solutions require an annual subscription. Simple Payroll is currently $259 a year, while Peachtree Select is $349 per year. For the extra $90 a year, Select provides W-2 delivery and the e-filing of tax forms. That's a pretty good deal. Both Simple and Select provide access to the payroll system directly through Peachtree Accounting. Direct deposit is an option for both Simple and Select, and both can print signature-ready required tax filing forms.
Peachtree Managed Payroll operates more like an outside service bureau, and can provide tax filing, compliance, and even payment. As with other service bureaus, the pricing depends on the number of employees and which services your client requires.
Peachtree Select Payroll allows you to enter a variety of different pay rates for an employee, as well as custom deductions and garnishments. As expected from even the most basic payroll system, your client can select the pay period they want to use and, if necessary, run a single check for a terminated employee or if an employee needs to be paid before the standard payroll run. Reports are useful, and include the usual payroll run data, YTD information, and summaries of what will be transferred into the accounting system. Individual employee histories can be run and depository forms can be automatically printed on plain paper. We found the data entry screen for both adding and changing employee information and entering current payroll run data, such as hours, to be easily navigated, though this is something we've come to expect from Peachtree applications.
For $349 a year, your client will get a serviceable system without all the bells and whistles, but with tax table updates automatically performed whenever there's a change.
QuickBooks Payroll Enhanced
Sharing the low-end accounting market with Peachtree, QuickBooks is used by many smaller businesses, many of which are doing their payroll manually, having once calculated the gross to net sometime in the past.
If you have clients in this situation, Intuit offers a number of QuickBooks Payroll solutions. On one hand, the Online Payroll for Accounting Professionals and Payroll Enhanced for Accountants offer your practice the opportunity to provide clients with payroll processing, either in real-time (Online Payroll) or after the fact (Payroll Enhanced for Accountants).
An Intuit Online Payroll is available for clients that want to use an outside service bureau. This is the PayCycle payroll service that was acquired by Intuit a while back and rebranded. Intuit also offers Payroll Basic, Payroll Assisted Service, and Payroll Enhanced, the version we reviewed.
Payroll Assisted is sort of a hybrid. Your client runs the payroll in-house, while Intuit tracks the client's payroll and prepares the tax forms where necessary. Your client will pay a monthly fee for this service, based on how many employees are paid. Payroll Assisted is fine for your clients who you don't really want to be bothered with helping out with payroll. Many practices can perform the same services for their clients and add to their revenue stream.
Enhanced Payroll is a complete in-house system that provides payroll calculation, tax-form preparation, and prepares the required tax forms to be physically or electronically filed. It has the common reports, and as with QuickBooks accounting, these can be customized or ad hoc reports can be generated.
As with Peachtree, there is an annual fee (which also can be paid monthly) based on how many employees will be processed. Up to three employees will cost your client $199 a year. Over three employees and the yearly fee is $279. This fee covers any updates in the software or changes in the tax tables.
Not all of your clients running QuickBooks are potential QuickBooks Payroll customers. But if you have a client using the software for their accounting, Intuit certainly has a wide variety of payroll options to offer.
Run Powered by ADP for Accountants
ADP Small Business Services
In the past, ADP was not really a consideration for your smaller clients, those with only five to 10 employees. A few years ago, ADP realized that there are a lot of small businesses that have payrolls, and established its Small Business Services division.
Run Powered by ADP is designed to provide the smaller business with pretty much the same capabilities that ADP offers to its larger clients. It has the same processing engine, though it's designed to have data entered by the client (or the accountant offering Run), not by an ADP data entry operator.
As such, the screens are laid out simply and are uncluttered. If your client is doing the data entry and processing, they won't have to hunt to navigate the system - it's very clear where a particular process is performed, and Run guides the user through each step.
Run Powered by ADP for Accountants is the same product, but offered to accountants to customize the product with their firm's name and logo. ADP is actually providing the services, but client contact is through your practice and you pay ADP and invoice the client. In addition, your practice projects a much larger capability to the client. As the client's accountant, you can have access to all of the payroll records.
As a huge payroll processor, ADP has the chops to offer pretty much all of the services of its high-end product. There are 80 or so defined deductions, export to popular accounting software packages, direct deposit and more. ADP prefers to quote prices on an individual basis, but like most service bureaus, the fee is dependent on the number of employees processed.
While not as large or as well known as ADP or Paychex, SurePayroll is still a national payroll service bureau with many of the same capabilities and pricing models. Where the vendor distinguishes itself is in how aggressively it markets itself to the accounting community. Depending on how much you want to be involved in your clients' payrolls, you can refer or resell the service.
If you are a CPA, compensation for referrals is somewhat of a dicey subject. SurePayroll doesn't actually pay you for the referral, but offers you a choice of "rewards," including gift cards or a donation to your favorite charity as a thank you. Of course, providing a client with a recommendation for a service provider that is going to take good care of them is compensation in itself.
The reseller program is much more clear-cut. SurePayroll will private-label its service with your practice's name. When a client signs on to process payroll, they will see your name on all the screens. SurePayroll provides the processing, as well as the customer support if needed.
One nice feature is SureChoice. Whether you are referring a client to SurePay, having a client participate in the reseller program, or just have a client using SurePayroll, you can sign up for SureChoice, which lets you access and print client payroll reports. This eliminates the need for a client to forward these reports on to you for your records and audit/verification.
SurePayroll can also provide ancillary services, acting as a portal to additional offerings, including 401(k) plans and administration, workman's compensation insurance, and even a service that provides employee screening.
The payroll system itself is not all that different from ADP's. All of these have a basic level of capability and they all have to be flexible enough to accommodate a wide variety of payroll situations, including mixed pay rates, multiple states and municipalities, and numerous reports. SurePayroll doesn't disappoint in any of these areas. The reports can be output in a variety of formats, including Excel, Rich Text, PDF, or to the printer.
Data entry screens and online reports are largely a matter of taste. We found SurePayroll's to be very useable, but you might want to look at the demo to see if they are suitable for you and your clients.
Ted Needleman is senior director of the Technical Services Division of Industry Analysts Inc., an independent market research firm and testing laboratory. He was previously the editor-in-chief of Accounting Technology, and writes frequently on software, hardware, and technology-related subjects.
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