In 2007, it's clear that payroll processing has become better, cheaper and faster - particularly at the small-business end of the marketplace.Companies like Intuit and Sage are building payroll into their accounting products for all but the very tail end of the market, while Sage, Thomson and Microsoft are beefing up their ERP and human resources offerings for the mid-range and enterprise markets.
So while the major trends in payroll - more electronic forms and filing, the migration to online processing and reporting, and simplified data entry - continue to improve the category overall, what will become of the stand-alone vendors? Consumers who have payroll bundled into their accounting software are unlikely to pay more for a stand-alone product unless there are truly compelling features or unique attributes.
But the stand-alone payroll processors do have an opportunity to thrive if they can partner with the other critical element in business accounting - the accountant. Which is why 2007 brings a fresh explosion of accounting-centric programs for payroll processing. It's the beginning of consolidation for the payroll software and services industry, starting with the battle between integrated and stand-alone packages.
In the end, it is likely that both forms will survive - with integrated payroll dominating the high end of the business market and stand-alone packages dominating small business via accountants. But in 2007, the battle for the middle makes payroll a more attractive, interesting and lucrative endeavor.
There are 11 different payroll solutions incorporated in the Sage Software lines of business applications, from Peachtree by Sage to the full-scale ERP solutions and an online, Web-based solution. While each of these (Sage Abra HRMS, Sage Accpac ERP, Sage MAS 90 and Sage MAS 200 ERP, etc.) offers specific benefits to specific types and sizes of companies, the most flexible Sage solutions for the mid-range client are Abra Payroll, a Windows-based application, and Sage Payroll Services, a Web-based payroll offering.
Abra Payroll can manage unlimited earnings, taxes and deduction types, multiple user-defined pay groups, and customizable transactions, and offers a full range of tax management capabilities, including all standard federal, state and local tax tables, compatibility with EFTPS, and electronic media reporting for all states.
Additional features include the ability to process a "trial" payroll; the ability to create NACHA-compliant files for electronically processing employee direct deposits and payroll tax deposits; the ability to print to several different types of check stock, including MICR encoding; and automatic timesheet entry. Abra Payroll is completely integrated with other components of Sage Abra HRMS, including Abra HR, Abra Attendance and Abra ESS. It also interfaces with many major general ledger and timeclock systems.
Those wishing to keep payroll in-house but outsource tax compliance can use the Sage Compliance Utility to extract the necessary data from Abra Payroll, and then send it to Sage Compliance Services, which will calculate all tax liabilities, complete the necessary federal, state and local tax forms (including IRS Forms 940, 941, 943 and 945), and remit payments to all the taxing authorities.
Abra Payroll continues Sage's strong focus on mid-range in-house payroll-processing needs, and on a first-rate online service. It's an industrial-strength product flexible enough to meet the needs of virtually any industry.
INTUIT SMALL BUSINESS ENHANCED PAYROLL FOR ACCOUNTANTS
Intuit has substantially honed its payroll offerings for use, and today offers three levels of payroll - QuickBooks Standard Payroll for in-house processing, QuickBooks Enhanced Payroll for more robust payroll applications, and QuickBooks Online Payroll for users of the QuickBooks Online Edition.
Enhanced Payroll for Accountants is an extension of Enhanced Payroll, with full support for state and federal tax filings, workers' compensation management, local check printing, integrated direct deposit (an add-on service) and payroll reports. As many as 50 clients can be managed from a single subscription. Intuit also offers employment tracking and compliance services to round out its offering of HR solutions.
QuickBooks Enhanced Payroll for Accountants works directly in QuickBooks to automatically calculate earnings, deductions and net pay after entering employee information just once. The information will transfer accurately for each payday to automatically calculate deductions and prepare paychecks to print. It compiles the payroll data for employee 940, 940EZ, 941/Schedule B, W-2, W-3, 1099-MISC and 1096 forms, and carries data directly into a business' quarterly federal and state filings, leaving only the signature section blank and ready for printing. QuickBooks Enhanced Payroll for Accountants also provides the option of direct deposit, in addition to allowing accountants the choice to print paychecks from their PCs. Also available in the package is after-the-fact payroll, the ability to schedule groups for payroll processing and the ability to produce client-ready reports.
QuickBooks Enhanced Payroll for Accountants is an economical, end-to-end payroll solution that combines the efficiencies of outsourced payroll with the access and flexibility needed by accountants offering it to their clients.
Paychex Online is a tightly integrated suite of Web-based services that we have viewed favorably since its introduction in 2001. One reason for this is that as the site has grown, so has the company's commitment to both accountants and their clients.
The online site itself offers simple to complex payroll management, with multiple rates of pay, complex deductions, and integrated 401(k) and workers' compensation. It offers integration with a host of other accounting applications, including an interface to post payroll data into popular general ledger programs, such as Accpac, Creative Solutions, MYOB, Peachtree and QuickBooks.
Each new Paychex Online client gets a dedicated payroll specialist who is personally assigned to respond to clients' needs and questions, in addition to providing quality control and external review of transactions. In addition, companies can give their accountants access to the data at no charge.
For accountants, a wealth of reference material is supported by educational programs in 14 practice areas. There are even referral sources for employee assessment, pre-employment screening, health insurance and other small-business services. And a General Ledger Reporting Service provides the option to concatenate multiple files into a single file prior to downloading the payroll data into the accounting package - useful for accountants who have multiple clients using Paychex products. Users can combine multiple general ledger files into a single file for downloading into their accounting software package.
Paychex has built a strong foundation in payroll services on the strength of its services. A strong management focus on accounting professionals and on enhanced customer service can only improve on this foundation by bringing additional value to an already strong package.
PAYCYCLE ACCOUNTING PROFESSIONAL PROGRAM
PayCycle continues to show growth rates well above industry averages for both client growth and for penetration of the accounting industry. This is due to aggressive pricing programs and to the fine-tuning of a simple online service that enables accountants to make their payroll services more profitable.
The PayCycle Wholesale Service, one of two accounting-centric offerings, allows professionals to maintain complete control over the payroll workflow through a branded payroll Web site, or to give clients access to shared payroll tasks, such as entering hours. PayCycle doesn't directly engage with clients; customer support is provided to the accounting firm.
With the PayCycle Client Retail Service, accountants recommend PayCycle's service to small-business clients with little or no firm involvement. Clients use PayCycle directly, while the accountant maintains free, real-time, shared access to client data, and the ability to export payroll information to QuickBooks and other leading accounting programs.
Enhancements to the service for 2007 include electronic state payroll tax payments for over 80 percent of the U.S. small-business population, and electronic state filings for over 61 percent. PayCycle 2007 supports both employee pretax contributions and employer contributions to health savings accounts, including W-2 reporting and unique state taxation. And it now provides complete electronic filing support for the new IRS Form 944.
PayCycle 2007 represents another incremental step forward in a campaign to win over a larger share of the accounting industry. PayCycle's strategy is a simplified payroll experience combined with attractive pricing and special programs for accountants, with a strong market response for both.
Payroll CS is a payroll solution aimed at helping accountants used the Internet to save time, paper and inventory. The result is an application that fits well within the advanced trends and technologies of a 21st-Century accounting practice.
Payroll CS is designed to use the Internet as an engine to more easily conduct remote payroll entry and remote check-printing services with clients, fostering a "paperless" payroll. In addition, NetClient CS private portals give the client access to their accounting and payroll data in a secure environment, and individual employees can use the Web Employee option for read-only access to electronic copies of their payroll information, including W-2s, W-4s and personal earnings history.
The Payroll Compliance module supports a multitude of day-to-day tasks, as well as quarterly and year-end processes, including the preparation of federal employment tax forms and quarterly and year-end reports that comply with federal formats. State payroll tax modules are linked directly with Write-Up CS and Payroll CS software, and use data already entered to create quarterly reports for filing without having to re-enter employees' Social Security numbers, names or total wages for the quarter.
The Direct Deposit module enables accountants to process and manage electronic payroll check deposits for their clients. In addition, it offers the convenience of making electronic payments to vendors, tax deposit agencies, 401(k) plan administrators and others.
With its steady but easy migration to the Internet, Payroll CS offers a "best of all worlds" solution that can also enhance profitability for firms that provide payroll services to their clients. It is a well-crafted solution that is scalable up to 1,000 employees per company.
PEACHTREE BY SAGE SMALL BUSINESS PAYROLL SOLUTIONS
The Sage Software payroll solutions for the small-to-midsized company are designed to integrate with the company's 2008 accounting solutions - Pro Accounting, Complete Accounting and Premium Accounting - and include both an outsourced service and in-house payroll.
Peachtree Payroll Service is the full-service solution. It includes payroll processing, calculation of withholdings, preparation of federal, state and local tax returns, direct deposits, and preparation and filing of quarterly and annual tax forms. Sage Software will also respond to the inquiries of tax authorities, and the service comes with a guarantee that deposits and filings will be delivered on time or Sage will pay the penalties.
The Peachtree Payroll Tax Update Service is an in-house solution that offers a helpful Payroll Set-up Wizard, the ability to pay hourly, salaried and tipped employees, and the use of up to 20 different pay levels. It provides automatic updates to federal and state tax table calculations; print-and-sign tax forms, and signature-ready tax forms for the 940, 941, 941B, 943, 945, W-2, W-3, and more than 230 state forms.
A solution that incorporates in-house payroll with tax preparation and filing by Peachtree is the e-Filing Advantage. And there is an additional direct-deposit service that offers the ability to make payroll runs with mixed paper checks and direct deposit. The company is able to deposit funds into up to four different accounts at multiple financial institutions.
Also of note for accountants is the Sage Software Accountants Network. Accountants who join the SSAN receive the Payroll Tax Update Service at no charge. In addition, SSAN members receive a discount that they can pass along to their clients or keep themselves for both Peachtree direct deposit and the Peachtree Payroll Service.
Peachtree's payroll solutions are an excellent fit for companies using its accounting software, and for those seeking a straightforward stand-alone solution. While this will work well for accountants whose clients use Peachtree solutions, the addition of accountant-centric programs for this line - as Sage Software does for many of its other payroll solutions - could only enhance its penetration in the accounting markets.
CompuPay is an online payroll solution aimed at small to mid-range companies or larger enterprises with multiple locations. Its accounting partnership program, CPA Select, offers a choice of referral, hosted or back-office options.
A separate online offering, XpressPayroll, is geared toward smaller offices of one to five employees that want to use an even more streamlined online payroll solution. XpressPayroll includes simple processing utilizing a minimum number of payroll screens; full-service tax filing, compliance and payment for all payroll taxing authorities for one state, including quarterly 941 and EOY 940; direct deposit for all employees (limit two accounts per employee); one low monthly price; check and report printing on site; online pay stub detail and W-2s; a general ledger link; and online reports, including labor and taxable wages, payroll check register, earnings report, deduction register and EFT entry register.
PowerPayroll offers the same services, plus additional services such as benefit accruals, time imports, garnishments, advanced reporting, the ability to set up multiple departments and units, an HR link, additional direct-deposit accounts per employee, and signed and sealed checks. Aimed at companies with up to 150 employees per location, PowerPayroll also offers a number of after-payroll services that include health insurance, worker's compensation insurance, 401(k) retirement plans, Section 125 plans, paycards and unemployment cost management.
The CPA Select program offers accountants access to a client's payroll reports, a co-branded Internet site, general ledger reports and interfaces, onsite printing capabilities, and a partner portal with the ability to view multiple client reports from a single portal.
With more than 25 years of payroll experience, CompuPay combines an excellent online solution with a surprisingly robust program for CPAs that includes CPE courses and local sales support in many areas. It is a solution that should be attractive to accountants serving a diverse client base and seeking an array of after-payroll support.
RUN POWERED BY ADP
ADP has substantially bolstered its position in the mid-range with enhancements to its EasyPayNet hosted service. Now it has bridged to the small-business segment as well, introducing an economical online service called "Run Powered by ADP."
Under the EasyPay system, accountants serve as the focal point for client payroll data. This data is then forwarded to ADP for processing via phone, fax or the Internet. Additional options provide for W-2 and 1099 processing; direct deposit; a TotalPay feature in which ADP debits the payroll from the client bank account, issues the paychecks and manages bank reconciliation; paycheck signing and stuffing; and a Check View system for online review of pay histories and paychecks.
The EasyPay Client Center is an online resource that enables the accountant to access electronic reports for the current pay period and up to 13 months of history, with remote access available the same day the payroll is processed. The client center also supports the export of client employee and employer data, including gross-to-net payroll, tax and personnel information, into an Excel spreadsheet for further analysis.
But the focus and attention for 2007 is on Run Powered by ADP. The value of Run for both accountants and their small-business clients is that it is fully online, with a simplified interface and straightforward payroll service that also includes tax filing and compliance services.
Accountants working with the mid-range and above will not want to abandon EasyPayNet, but may want to augment that system with Run for their small-business clients. At a cost of only $29.99 per month for unlimited, do-it-yourself payrolls, it offers both ease and economy to a market segment that accounts for the majority of American businesses.
SURECHOICE FOR ACCOUNTANTS
It's harder to differentiate between online services than desktop applications when it comes to payroll services, and harder yet to avoid the temptation to bypass the accountant and go directly to the client. SurePayroll has designed a service that manages to avoid both issues. SureChoice for Accountants is a branded extension of SurePayroll's SureChoice Access online payroll service, and provides a branded accounting service or pass-through referral system built on a simplified, three-screen payroll system.
SureChoice for Accountants provides a turnkey solution that lets accountants offer a branded, Web-based payroll service to clients - licensing and remarketing the service under their brand and pricing. The pricing includes direct deposit, all tax filing and tax payments (federal, state and local), quarterly returns, unlimited customer service, and employee self-service functionality.
Recent enhancements to the service include the rebranded Clickfree, a service to handle all payroll-related federal, state and local tax payments and filings. Clickfree automates tax calculations and deductions from employees - checks, payment remittance to the proper taxing authorities and making all required filings. And should a tax notice arise from an inaccurate or untimely deposit or filing, SurePayroll pays any resulting penalties and interest. Another enhancement, the SureAdvisor Compliance and HR Resource Center, seamlessly integrates with SurePayroll's payroll process and offers a one-stop shop for compliance posters, business forms, how-to guides and more.
SurePayroll is an excellent example of how well an online service can serve both clients and their accountants, and is clearly looking to build on this payroll framework with other business and legal services. With a revamped price list for 2007, it is a service attractive to business customers and their accounting advisors.
Dave McClure is the president of Kent Associates, in Alexandria, Va., an independent testing laboratory and evaluation service.
St. Petersburg, Fla.
Intuit Small Business Enhanced Payroll for Accountants
Mountain View, Calif.
Palo Alto, Calif.
Thomson Tax & Accounting
Peachtree by Sage Small
Business Payroll Solutions
Run Powered by ADP
ADP Small Business Services
Florham Park, N.J.
SureChoice for Accountants
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