by Ted Needleman
If your firm is looking for an additional source of revenue, why not consider payroll services?
While payroll is fraught with the potential for time-consuming problems, a good system can minimize the long hours required to make adjustments and update tax tables. And, if you don’t want the hassle of keeping client payrolls on your system, you can always work with a service bureau to process payrolls for clients, either directly or under your supervision.
The real decision is how to recommend that your clients handle their payroll, and secondarily, whether to bring the application in-house or outsource it. Both approaches have benefits and drawbacks.
Doing payroll in-house protects the data, and lets clients maintain control. The client doesn’t have to worry about losing a phone or Internet connection, or whether the checks or reports will be delayed.
The downside is that payroll requires lots of maintenance. Your client needs the staff and computer resources to support the application. Angry employees don’t care if the payroll PC was having disk problems, or that a downed line prevented a direct deposit from making it to their account. They want their money when it is due.
Outsourcing payroll can take several forms. You can process the payroll for your clients, effectively establishing a payroll service bureau within your firm. Several of the packages reviewed here make this process a lot less daunting.
You can also set clients up with a service that allows them to effectively process payroll in-house, using a supplier’s servers and software. PayCycle and Intuit’s Complete Payroll give the client almost complete control, even to printing checks and reports in-house.
Finally, you can take a traditional route by referring your client to a service bureau. ADP and Paychex are the largest, but are far from the only ones. Both vendors are accustomed to working with accountants and have services geared for small and midsized businesses. You may want to visit these companies’ Web sites for details on their offerings for accountants.
ADP has a special division dedicated to meeting the needs of smaller and growing businesses. For these clients, the vendor’s EasyPayNet may be a good choice, as it provides Web-based payroll entry, along with pricing specifically geared towards smaller companies.
One often-touted benefit of service bureaus is that there’s no large, up-front investment. With the reasonable costs of today’s PCs and software, a more appropriate consideration might be that your clients won’t have to worry about data backup and ongoing software and tax table maintenance.
Client or service bureau?
One last question that you need to answer is whether you want to serve as a payroll service bureau for your clients. This can be a significant source or revenue for your firm.
On the downside, performing payroll service tasks requires significant time, money and staff resources. In addition to the software, building a payroll service requires reliable hardware, back-up capabilities and staff training.
How we tested
Most of the software that we tested doesn’t really need the newest and fastest hardware to run. Because of this, many clients and firms consider dedicating somewhat less-capable PCs for payroll purposes.
This is a mistake, considering how mission-critical payroll is, and the liability you might face if a hardware crash caused you to lose client payroll data. Payroll applications should be run on up-to-date hardware, running the latest version of Windows, and with excellent backup.
Respecting this, we tested on a 2.4-MHz Pentium 4 PC with a 120GB hard disk drive and an Iomagic/Verbatim DVD burner as the backup device. This burner lets you store 4.7GB of data on an optical disc.
All of our tests used Windows XP Professional, with all update patches applied. The tests of PayCycle and Intuit’s Complete Payroll accessed each service over the Internet using a broadband cable modem connection.
Advanced Micro Solutions
1099-Etc & A-T-F
Most accounting practices have at least several clients for whom they prepare after-the-fact payrolls. Frequently, they prepare their payroll by hand, which requires that you track payroll deposits and quarterly filing requirements from the canceled checks.
Some practices simply reconstruct the payroll using hours, wages and a standard payroll software package. An after-the-fact, or ATF, payroll system, such as AMS’s 1099-Etc & A-T-F, is usually an easier way to service these clients, and provides the added benefit of letting you also produce the requisite 1099s and W-2s for these clients.
AMS is one of the most recognized names in ATF payroll.
To produce an ATF payroll, you’ll need the base 1099-Etc package, as well as the $95 ATF option. You may also require additional options, such as the laser printer and magnetic filing modules. Also, a nifty forms module lets you design common office forms, which can then be filled in by staff members to automate office tasks. With all these features, the $95 base price leaps to well over $300.
There isn’t much to setting up 1099-Etc & A-T-F. The entry screens aren’t fancy, but are easy to use. You can even enter tax tables, and use the software to produce the check from gross to net. With the laser forms option, you can print an employee’s entire check, including the MICR line. This is actually well beyond after-the-fact, and lets your client produce a truly live payroll.
This product is not for generating large live payrolls, as a few employees is probably its reasonable limit. For ATF chores for clients, however, Advanced Micro Solutions is an excellent choice.
Best Software Inc.
Abra Payroll is Best Software’s payroll offering for larger companies. For smaller companies, Best offers DacEasy, reviewed later in this report, and its Peachtree Complete small business accounting software has a very serviceable payroll feature.
Abra Payroll is part of Best’s Abra Suite 7.0 suite of employee-oriented applications. The suite approach may be particularly good for some clients, as all of the regulation and liability involved in maintaining employees means that having only a payroll system may not be enough.
Abra’s integrated suite of employee-oriented applications lets users track other important information, and even manage the employment and interviewing process. Other components of the Abra Suite 7.0 include Abra Attendance and Self-Service.
Self-Service is an option that your clients may want to seriously consider. With it, authorized employees can change their benefits elections, find out their time off and vacation balances, and change demographic information, such as their address. All of the transactions eat up valuable and expensive payroll staff time, so Self-Service can pay for itself in a short period.
The payroll system is powerful and comprehensive. It easily handles multi-state and multi-company payrolls, performs job costing, and integrates with many of the popular midrange accounting systems, such as Best’s MAS90. Deductions are unlimited, and you prioritize them, so that various government levies can be handled before optional deductions.
Reporting is equally powerful. Abra Payroll includes over 100 comprehensive reports, and is compatible with Crystal Reports. For many ad hoc reports, your clients won’t need Crystal, as the software has a built-in Abra Secure Query tool, which is fairly easy to use.
You can generate some pretty sophisticated reports using this tool. The ability to run trial payrolls is another high-end feature. You can run a trial payroll, see what the end result is, then change the payroll, possibly adding or deferring some employees to meet restricted cash availability or an unexpected windfall.
Abra Payroll is not inexpensive. You can easily double the cost with some of the options, including laser signatures and MICR check printing. Still, for a midsized client, Abra Payroll and possibly other Suite 7.0 components may be just the ticket.
Creative Solutions Inc.
Creative Solutions, a Thomson business, is one of the better-respected suppliers of applications for accountants under its Solutions label. And Payroll Solution is no exception. It’s designed for the full-service accounting practice that wants to offer clients payroll service bureau capabilities.
Although the software is easy to set up and configure, it is surprisingly comprehensive considering its reasonable price. Initial set-up is fast, and the application lets you apply employee settings across multiple employees. This can speed things up when a number of employees get paid at the same rates.
Because Payroll Solution is designed for service bureau operations, there are a number of nice “frills” beyond a standard payroll. You can design transmittal letters to accompany payrolls, and the system’s custom check designer can customize 50 check templates for specific client needs. CSI includes a transparent design template to help with this process.
Most service bureaus offer remote data entry for their clients, and with the Payroll Solution, you can too. The software’s “NetClient Portals” lets your clients do their own data entry with the software running on your server. They can also download the check files in PDF format for printing on their PCs.
Comprehensive reporting capabilities should meet the needs of most of your payroll clients, but for those with more complex requirements, the optional Payroll Reporter adds extensive additional reporting capabilities. And Payroll Solution integrates seamlessly with CSI’s other applications, including write-up.
Payroll Solution isn’t cheap. With the required Payroll Compliance Solution (which adds 1099, 940/941 and W2 reporting), state payroll tax options, and direct deposit and other capabilities, you can easily exceed $3,000.
DacEasy Payroll v. 12
DacEasy Payroll is part of an integrated DacEasy accounting system, but can be installed as the only application. This might be a good approach for a client who wants payroll right now, but who anticipates upgrading to a full accounting system within a short period of time.
With a $500-per-module price, DacEasy is affordable, especially if your client will be implementing it in stages. Keep in mind, though, that DacEasy is sold through Best Software’s reseller channel, not at retail.
The reseller channel connection is a benefit in that it will be very easy to find a reseller to sell payroll and other modules to your client, help them install and configure the system, and train them. However, DacEasy is not particularly hard to install or configure.
For the price, DacEasy provides a robust payroll. You can purchase a multi-user license, but the application itself is really intended for single-company use. You may have to define some of the deductions for your client, such as 401(k)s or a cafeteria plans. The software provides for up to 309 user-defined deductions, so you have plenty of leeway in this area.
DacEasy is strong in reporting, especially for an inexpensive package. It offers a nice selection of standard payroll reports, and Crystal Reports (not included) can be used to generate custom and ad hoc reports when necessary. Your client can also generate direct-deposit-compatible files for participating banks.
DacEasy does not provide MICR compatibility, so your client will need to use pre-printed check stock. Still, if your client has not yet settled on an accounting system, DacEasy Payroll might just tip the balance in DacEasy’s favor.
With last year’s purchase of CBS Business Systems, Intuit added a full-featured payroll service bureau to its stable. The CBS Payroll has been considerably revamped and renamed Intuit Complete Payroll.
In other payroll offerings, Intuit’s QuickBooks has a “do-it-yourself” payroll that’s ad-equate for many smaller companies, and a QuickBooks Assisted Payroll for those users who don’t want to handle the various form filings by themselves. Intuit also has a stand-alone payroll system, the former QuickPay, now called QuickPayroll.
Complete Payroll has several versions. We tested the completely Web-based version, where employee data entry is performed online. Intuit also offers a version that puts some of the software on your client’s PC, but actually processes payroll on Intuit’s remote servers.
Also, your clients can get complete integration between the Complete Payroll and their accounting information if they are QuickBooks users. In fact, both your client and you can download this information, so that you can maintain a duplicate set of records for your clients. All of the payroll options are explained in detail on Intuit’s www.payroll.com Web site.
However, Complete Payroll and PayCycle require a fairly high-speed Internet connection. With our cable modem service, which is usually about half the speed of a T1 line, entering employee hours, running reports and downloading completed reports and checks were all very useable processes.
Complete Payroll also offers the option to either phone or fax Intuit employee payroll data, so clients aren’t stuck if their Internet connection goes down.
Intuit helps your client set up the payroll, and can conduct staff training online. There are 40 standard reports, and these can be delivered electronically in PDF format. Paychecks are also delivered in PDF format (assuming your client doesn’t have Intuit print them), and can be printed en masse on safety paper.
The PDF file lets you re-run the entire check print run if necessary, though these files should be archived safely or deleted to prevent inadvertent or deliberate check reprinting.
Complete Payroll is comprehensive, and offers user-definable deductions in addition to the common ones, such as cafeteria plans, 401(k)s and others. If your clients need custom ad hoc reports, however, the Web-based version is very restrictive. Intuit informs us that the PC-based version is more flexible in this regard.
If you have smaller clients interested in the convenience of a payroll service bureau, but not one of the giant services, consider recommending PayCycle.
The program targets smaller clients with 20 or fewer employees, and is relatively low-priced. Its “Basic” plan starts at under $20 a month for up to five employees, and employees over that amount add only 99 cents a month to the bill. This plan provides only federal tax preparation, depositories and 940/941 preparation.
If your client needs state tax capability as well (and most will), the PayCycle Plus plan starts at $39.99 per month for the first five employees. Direct deposit, e-mail reminders and additional reports beyond the fairly basic ones included with the first two packages up the ante again, to the PayCycle Premium package, at $59.99 for the first five employees.
We found initial set-up fairly straightforward. The screens are easy to follow, but the amount of hand-holding, which is probably a good thing for many of the smaller clients to whom this service will appeal, can be annoying. It should allow users to enter more data on a single screen, rather than requiring a large number of screens to complete an entry.
Other than this minor criticism, PayCycle is easy to use. As with any online system, your client should have a high-speed Internet connection.
PayCycle interfaces nicely with entry-level accounting systems, such as QuickBooks, Quicken and Microsoft Money, importing payroll data directly into these applications. You’ll need QuickBooks- or Money-compatible voucher checks to print the paychecks.
PayCycle does not offer custom formatting or MICR check-printing capabilities. On the plus side, PayCycle does handle a wide range of deductions, including 401(k)s and other retirement plans.
Reports are fairly basic, but quite useable. There is no ad hoc reporting capability available, though you can export payroll data into one of the supported accounting applications and generate additional reports from there.
When you start getting into the Premium package, PayCycle starts to lose some of its appeal. At that price point, your client may as well deal with ADP, Paychex or a similar payroll service bureau. The PayCycle Plus plan, however, seems like a good fit for smaller clients who might want more attention than is available from a payroll giant.
PenSoft Payroll Accounting Edition
Depending upon whether you want payroll software for your firm or for your clients, Pensacola Software (PenSoft) may be a one-stop answer. The vendor provides several vertically oriented payroll systems, including ones for health care providers, restaurants and hotels, distribution and manufacturing entities, and a generic payroll.
The Accounting Edition Ñ for service bureau use Ñ is priced based upon the number of employees processed. It doesn’t matter which companies or clients those employees are attached to, it’s just the sum total that determines fees. The base price lets you process up to 50 employees.
The software is complete. It includes tax tables for all states, and provides features, like direct deposit and MICR check printing, that many other vendors charge extra for. Also included are W2, 1099 and 940/941 preparation, as well as magnetic filing. These are features that many payroll software vendors provide as extra cost options.
The software supports a wide variety of deductions, and includes 401(k) and cafeteria plan support. Also, there are a wide variety of reports, and you can generate invoices for billing clients.
The Accounting Edition is a stand-alone payroll, and doesn’t directly integrate with any particular accounting application. You can, however, configure it to export payroll data in common export formats, so moving a client’s payroll into whatever write-up package your firm uses shouldn’t be a problem. Accounting Edition also has data-import capabilities from many time and billing systems.
Set-up is straightforward and screens for data entry and processing are nicely laid out and easy to navigate. Considering the $2,000 starting price, which gives you the ability to process up to 50 employees, Accounting Edition doesn’t provide a lot of frills.
It does, however, enable you to service clients’ payrolls effectively and efficiently, without requiring a huge, up-front investment. Even with larger numbers of employees processed, the per-year cost of PenSoft’s Accounting Edition tops out at $2,400, which includes free support.
Time+Plus Payroll is one of the higher-end systems reviewed here. It’s available in a version for large enterprise companies, and another version designed as a turnkey service bureau. With prices starting at $15,000 for the service bureau version, you need to be serious about offering this service to your clients. Keep in mind that the service bureau version has a $15,000 base price for a non-SQL version, and its SQL version starts at $20,000.
That’s a lot of money, but it includes more than just a disc or two of software. As a turnkey system vendor, Time+Plus Inc. provides the software, installation and configuration, and helps you market their payroll services.
Time+Plus runs its business much like a franchise, in that it won’t place multiple installations too close geographically, where they will actively compete for the same client base. Your firm becomes a Time+Plus Service Center and benefits from the parent company’s nationwide advertising. There are over 200 independent service centers in the U.S.
Along with all this help, Time+Plus is also loaded with desirable service bureau features. The price includes direct deposit, MICR check printing, loads of reports, and interfaces to a number of automated time-keeping systems.
The ability to do direct time entry from a computerized timekeeping system is a real time-saver both for your client and your firm. Using an electronic time clock also offers clients benefits such as alerts when an employee forgets to punch in or out, or is working unauthorized times.
Time+Plus also allows you to offer very high-end customer services, including remote access for data entry and for maintenance. Ancillary options extend the basic payroll services to include human resources.
If you are eager to create a payroll service bureau in your firm, but are less enthusiastic about starting from scratch, consider Time+Plus.
Vendor Information1099-Etc & A-T-F
Payroll Solution for Windows
DacEasy Payroll for Windows v.12
PenSoft Payroll Accounting Edition
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