by Ted Needleman
Payroll is the one application where many clients are unhappy with all of the alternatives.
That’s not because the choices are poor or sparse — there are plenty, from inexpensive in-house solutions to robust service bureaus. The reason so many companies are unhappy with their method of dealing with payroll is simply because it is one of the most labor- and detail-intensive financial applications, as well as one that simply can’t be eliminated.
Today’s payrolls are growing ever more complex — and producing paychecks is just the tip of the iceberg. Once that has been accomplished, there are volumes of reports that have to be produced and filed. Payroll tax deposits need to be made on a timely basis, and magnetic media filing requirements detail the way that some government reports must be submitted.
No wonder automated processing is so popular. The big question is not whether your clients’ payrolls should be computerized, but what process is the best way for them to do it.
Traditionally, many clients who wanted the advantages of computerized payroll without the hassle of processing it themselves often turned to payroll service bureaus, such as ADP and Paychex.
Even if a service bureau is processing your clients’ payrolls, you are likely to remain involved. Many clients still prefer that their accountant make up, or at least approve, all payroll depositories and the forms that will be submitted to the sundry government agencies.
In fact, there are still a lot of clients who would prefer that their accountants take on the entire burden of the payroll application. It’s not uncommon for accounting practices to use their computers to process payrolls for clients in the same service bureau mode as ADP and similar vendors.
This decision isn’t one that should be made lightly. You need to be diligent about software bugs and updates, as well as maintenance of tax tables and backing up of client data.
An alternative to creating your own payroll service bureau, or turning your clients over to one, is to partner with a service bureau that functions as a division of your practice. For example, AccountantsWorld’s Payroll Relief (www.accountantsworld.com) appears to your client as if it is a service bureau run by your practice, while in reality, all processing and maintenance is performed at AccountantsWorld’s facilities.
Finally, there is the in-house option — you recommend a package that your client will use in their own offices. Many of your clients will feel that this is the best choice, as it provides data security and flexibility in the timing of processing the payrolls. It also requires a lot of discipline on your client’s part.
In helping your client decide which payroll application is best for them, one additional factor to consider is whether they are already running a computerized accounting system. If so, the payroll offered by the accounting software vendor may be the easiest to integrate and implement, assuming that it meets the client’s needs.
Some of these needs aren’t obvious. A client may have an inordinate number of custom deductions that they need to be able to take out of an employee’s paycheck. Multi-state payrolls are common, but not all payroll applications give you this capability. Also keep in mind specialized payrolls, such as those needed for construction.
How we tested
While payroll is a calculation-intensive application, it really doesn’t require all that much computer power. All of the payroll applications we reviewed were installed and run in single-user mode, though several of them will support multi-user access across a network, or even, with the addition of Web server software, through the Internet.
In most cases, a pretty basic PC will foot the bill. We tested the packages on a 2.4-GHz Pentium 4 PC. Our test system had a large 120GB hard disk drive, and a Lite-On dual-layer DVD burner. These new burners up the recording capacity to over 8GBs, which makes them excellent back-up devices for applications like payroll, which might produce very large files by the end of the year. You might also consider one of the many available USB 2.0 or Firewire external hard disk drives.
Our test platform had Windows XP Professional with all upgrades and patches installed. We also recommend, as with all mission-critical applications, that you or your clients’ PC be protected with an uninterruptible power supply.
In testing each package, we installed the vendors’ demo company and employees, edited employee information, entered hours and other payroll information, and produced reports and paychecks (on blank paper). Where Internet access was required, such as with Intuit’s Do-It-Yourself Payroll, it was accomplished via a broadband cable modem account.
In the seven reviews that follow, we examined a variety of approaches to payroll. Several of the packages are stand-alone applications suitable for clients to install at their locations. Several others are service bureau packages, meant for installation in a practice so that you can offer processing to your clients.
Pricing also runs the gamut, from very inexpensive all the way up to a major investment. We’ve even included an Internet alternative with reasonable monthly pay-as-you-go fees.
Accpac Simply Accounting Payroll 2004
Your first thought might be, “Just how good can an $80 payroll package be?” While your (and our) skepticism is justified in many cases, this is not one of them. Accpac’s Simply Accounting almost annually surprises us with how good it is and how much it offers for the price.
Strangely enough, Simply Accounting Payroll 2004 is not meant to be used with the latest versions of Simply Accounting. That’s because the Pro version of Simply Accounting 2004 already has payroll built in, while Simply Accounting 2003 simply isn’t compatible. Earlier versions of Simply Accounting 6.0 through 9.0 do work just fine with Simply Accounting Payroll 2004. On the other hand, Simply Accounting Payroll 2004 works just fine with QuickBooks or MYOB, or as a stand-alone application.
There’s nothing very fancy about Simply Accounting Payroll 2004. It sets up easily, and you can import data from QuickBooks or MYOB. You can define several custom deductions, but don’t look for the ability to get very fancy in the calculation of these. If your clients are using sophisticated cafeteria plans, this is probably not the right payroll system to recommend. Nor does Simply Accounting Payroll 2004 have the ability to process multi-state payrolls, though you can calculate the state taxes for a single specific state.
As with Simply Accounting, the payroll system is bilingual. When you install the software, the installation routine asks whether you want to use English or Spanish.
Even though Simply Accounting Payroll 2004 is inexpensive, your clients won’t have to forsake offering direct deposit to their employees. There is a one-time set-up fee of $70 for this service, after which each employee transaction will cost your client $1.50. That’s on a par with what other payroll systems charge for this feature.
There is one strange quirk you should be aware of. While it only costs $79 to purchase the software, which includes one year of tax table and program updates, after that you’ll have to purchase a SimplyCare support plan, which starts out at $99 a year. We had no way of knowing whether a copy of next year’s version will import your client’s existing Simply Accounting Payroll 2004 data and records. If it does, it might make more sense to simply purchase the $79 package again next year, rather than pay $20 more for the support plan.
Regardless of which path your client takes, if their payroll is simple enough so that Simply Accounting Payroll 2004 fulfills their needs, they will be delighted that you recommended it.
Best Software Abra Payroll 7.32
Abra Software is a division of behemoth accounting vendor Best Software. So, you know it is going to integrate very nicely with mid-range accounting applications such as MAS 90, also from Best Software.
Perhaps even more important, Abra really made its name in human resource applications. So while the Abra Payroll is very strong, it is also a important piece of the comprehensive Abra Suite 7.0, which contains Abra Payroll, Abra HR, and other optional components to provide a complete payroll/HR solution for larger clients.
Abra Payroll is just a bit more time-consuming to set up than many of the other applications we looked at. That’s because the application maintains more information on each employee. Once this information is entered, standard payroll data entry and the payroll run itself can be processed very quickly.
Because Abra Payroll is designed for larger enterprises, there are some optional features that some of your clients may find very helpful. Your client can purchase a module that will interface with many of the popular electronic time clocks, so that employee time is automatically captured, eliminating time-consuming time card keying and improving accuracy. Self-service is another feature that allows employees to check some of their data, and even edit and update information such as W-4 exemptions, benefit elections and even change-of-address processing. Other optional features include laser check signatures and MICR check printing.
Even without any options, the payroll system is powerful enough to handle complicated payrolls, including multi-state calculations, as well as multi-company payrolls.
Vendor contact information
Reporting is what you might expect from a high-end package. There are over 100 standard reports, which can be modified to a large extent with filters. If your client requires even more flexibility in their reporting, the data files are compatible with Crystal Reports. Ad hoc reports are fairly easy to produce using the Abra Secure Query tool. Finally, your client can even run a trial payroll, see what the result is, and back out to make changes before running the “real” payroll.Not all clients will need, or even want, a payroll system as comprehensive and powerful as Abra Payroll. For those that need its capabilities and features, it is worth the price.
Creative Solutions Payroll Solution
Some of the applications we tested here are for your clients. Payroll Solution is for your firm, assuming that you’d like to go into the payroll service bureau business. Creative Solutions is owned by Thomson, the same company that publishes Accounting Today, and is one of the premier suppliers of applications for accountants. The advantage of this is that the “Solutions” line is a full suite of applications that uses the same basic underlying database. This makes integration a snap if you are also using other Creative Solutions applications.
You will also find Payroll Solution very simple to set up and use. If you are performing after-the-fact payroll for clients using Write-Up Solution, you can transfer data over to Payroll Solution directly. New employee set-up can be simplified by creating custom templates, and you can use existing employees as the basis of these templates when you have similar pay rates and job classifications.
Many payrolls let you add custom deductions. Payroll Solution does as well, but you can also add custom data entry fields to accommodate the special needs of specific clients. If you need to update a “standard” data field, such as the pay rate for a specific hourly task, you can make this change for one employee, and apply it globally to all other employees.
As befits a service bureau application, there are a host of features that are specifically targeted at this type of operation. These include payroll transmittals, more than four dozen different check layout templates, and the ability to “print” the payroll checks into PDF files.
Remote data entry, which is common with commercial service bureaus, is also supported by Payroll Solution, so your clients can key in their own payroll data and edits. An optional Payroll Reporter lets you produce any ad hoc or custom reports needed, though the standard complement of payroll reports is quite comprehensive.
As with many of the products that are covered in this roundup, Payroll Solution is just the tip of the iceberg. You’ll also have to have Payroll Compliance Solution, and chances are you’ll need one or more state tax add-ons, as well as direct deposit. 940/941 e-filing costs extra as well. When you hit the total key, the bottom line can easily exceed $3,000. That certainly isn’t the most expensive product included here, but it’s also a pretty hefty check to write. Of course, it really isn’t an excessive amount to get your firm into a new revenue area. The price is also quite reasonable considering the utility of the application.
QuickBooks Do-It-Yourself Payroll
Intuit has a variety of payroll solutions available for accountants and their clients. Complete Payroll and Assisted Payroll are service bureau solutions, while QuickPayroll is a stand-alone enhancement for Quicken that provides payroll capabilities for smaller businesses. In the middle is Do-It-Yourself Payroll. DIY Payroll installs payroll capabilities into QuickBooks and provides different levels of features depending upon whether you subscribe to the basic service or add in options.
DIY Payroll is not a stand-alone product; it requires QuickBooks 2002 or later in order to operate. In fact, payroll processing, data entry and reporting are all performed from inside QuickBooks. So is the set-up of DIY Payroll. This is done from within QuickBooks, setting up pay rates and standard weekly hours for those employees that are paid weekly rather than hourly. You can use several custom deductions, but if you have a lot of custom deductions, your client is probably going to be happier with a somewhat high-end package.
The application provides a nice selection of reports, and can prepare the necessary depositories. DIY Payroll automatically checks over the Web for program and tax table updates before processing. Checks are printed on your client’s printer, and they will have to order QuickBooks-compliant checks, which are available from a variety of sources, including Intuit.
The cost for DIY Payroll is not excessive, at $15 a month. Your client can even set up employees for direct deposit. This, however, starts to bump up the price, since each direct deposit check costs $1.50, along with a one-time $74 set-up fee. That’s not really out of line with what other vendors charge for direct deposit, but with as few as four or five employees, the direct deposit charges could cost your client more than the basic payroll monthly charge.
Also available is the ability to file and pay payroll taxes electronically. This will add a yearly fee of at least $99 to the pot. While your client is shelling out for all this, they might also want to consider the Employee Organizer, which lets them track employee information and updates them on employment regulations that they need to comply with. The first year of this service is $299, though afterward it drops down to $59 a year.
Many of your smaller clients, however, will be quite happy with the basic $15 a month service. Perhaps less palatable will be the requirement to run their business using QuickBooks.
PenSoft Payroll Plus 2004
No matter whether you want a payroll for your clients or for your own firm to provide service bureau payroll for clients, PenSoft has an application that will fit the bill. In addition to the service bureau-oriented Payroll for Accounting that we looked at last year, PenSoft has vertical market payrolls for a variety of types of businesses, as well as three different levels of its Payroll Plus generic payroll system.
The basic payroll is the Standard Edition, with prices starting at $349 for between one and 50 employees. This edition has a maximum capacity of 100 employees, so it may not be suitable for your larger clients. Even at this price, the Standard Edition includes multi-state and multi-company support, and 401(k) and cafeteria plan tracking, attendance management.
We looked at the Professional Edition. This edition has three levels of employee capacity — up to 50 employees, up to 100 employees, and up to 250 employees. The Professional Edition adds some desirable features, including job costing and direct deposit. We found the software very easy to configure and use. You can choose from a variety of check layout formats, and there are a large number of very useable reports. W-2 and magnetic media filing capabilities are included in the Professional Edition. This edition starts at $499 and runs up to $649, depending on the number of employees.
If your client needs even more capability, such as MICR check printing, you might want to recommend that they look at the Platinum Edition. As with the other editions, the Platinum Edition is priced according to the maximum number of employees to be processed, with the first level (up to 50 employees) starting at $1,149. The Platinum Edition can handle an unlimited number of employees, though the price structure ramping stops at over 500, priced at $1,669.
Payroll Plus 2004 is not very glitzy. The screens are straightforward and easy to navigate, but compared to many of the other applications in this roundup, the software is rather plain Jane. That’s fine — it works well and is priced very reasonably for that features that are provided. We especially like the ability to buy just what your client needs, and upgrade at a future time when you need more features or to process a greater number of employees.
Red Wing Payroll v. 8.03
Many modular mid-range accounting systems provide payroll. As with the Red Wing Payroll that we reviewed, these modules can often be used as a stand-alone payroll, in conjunction with the accounting products provided by the vendor, or with the output exported in a common format. We tested the Red Wing Payroll in stand-alone mode, but it seamlessly interfaces with either the Red Wing TurningPoint or AgChek accounting systems. You can also output the reports in ASCII format.
Depending on your client’s needs, Red Wing Payroll can be a very reasonably priced or a somewhat expensive solution. The single-user version is priced at $795, which is reasonable. Adding additional users, though, at $295 each, starts to raise the ante. State reporting is extra, and is provided by Aatrix. This runs between $199 and $399, depending upon how many companies and states are required. Adding additional users to this capability also costs extra. Finally, if your client wants direct deposit capacity, the software to accomplish this adds another $395 to the pot, plus, of course, a per-employee charge that’s industry-standard.
As a stand-alone payroll, the Red Wind system is quite capable. It allows you to perform multi-company, multi-state payrolls; handles custom deductions as well as the more common ones, such as 401(k) and cafeteria plans; and has an excellent suite of reports, including project/job tracking and reporting. Excellent on-line help, including cue cards, make it quick and easy to get up to speed.
Once up and running, your client may want to consider using an electronic time clock, assuming that they have hourly workers. Red Wing Payroll can interface with most of the popular models, allowing the employees’ times to be directly entered into the payroll.
If your client is in the market for both an accounting system and a payroll application, you might want to take a look at the pairing of TurningPoint and Red Wing Payroll.
This roundup has presented several options if your firm wants to get into the payroll service bureau. Time+Plus Payroll is probably the more expensive of those we looked at, as it requires a minimum investment of about $15,000, and that’s for the non-SQL version of the software, which is the version we reviewed. If you want the SQL-based software, the investment jumps to $20,000 or more.
Having said that, we found Time+Plus to be exceedingly feature-rich. It can handle just about any combination of deductions, and you can prioritize them so that certain deductions, such as garnishments or loans, are taken out at specific points in the calculation process. Direct deposit, MICR check printing and a wide variety of standard reports and custom reporting capabilities help you to serve a wide client base with diverse payroll needs. Other high-end service bureau features include remote access for data entry and employee information maintenance. As with several of the other higher-end payroll systems we examined, Time+Plus can interface with several of the more popular electronic time-keepers.
Time+Plus has expanded the payroll system this year with a new HR system. This is not part of the base offering, but allows you to service all of your payroll clients’ HR needs as well.
One large difference between Time+Plus Payroll and the other packages we looked at, even those designed for service bureau use, is that Time+Plus is a turnkey system. It is designed like a franchise — Time+Plus helps you get set up, trains you in both operating and marketing the software, and continues to provide marketing and other ongoing help and support when you are up and running. Your firm becomes a Time+Plus Service Center, and the vendor will not place another in your immediate area. At the present time, there are several hundred of these centers operating, all of which benefit from the company’s nationwide advertising.
Not every firm needs, or even wants, the hand-holding that Time+Plus provides (and requires). If you are a bit uncertain about getting into the service bureau business, however, Time+Plus Payroll will be worth your time to investigate.
Ted Needleman, a former editor of Accounting Technology, is a consultant and freelance writer based in Stony Point, N.Y.
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