2008 Review of Professional Payroll Systems

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From the Sept. 2008 Issue

Through my high school and early college years, I held nearly 20 jobs — everything from busboy and fast food clerk, to working at a “big box” store, delivering pizzas and doing clerical work for a land mineral leasing agent. At that age, and in the low level roles I filled, I really didn’t think about all of the back office functions that went into my paychecks. All I cared about was the final product from my perspective: payday. My employment “drifter” ways abruptly ended with my enlistment in the Navy, and following that service I settled down to two jobs while I finished my undergraduate degree.

After many years in professional positions, I’m a little older (and hopefully a little wiser), and I have seen and taken part in the rather significant effort that goes into paying employees and complying with federal, state and municipal employment and workplace regulations, especially for businesses with high turnover, like most of the jobs I held in my early life. From new hire reporting, wage structures, departmentalization, overtime, remitting withheld payroll taxes and workers’ comp, paying third parties for deductions such as insurance and garnishments, and tracking accruals for time off. And then, of course, ensuring that corresponding entries are made to the appropriate GL accounts. There are literally hundreds of processes involved in the larger payroll function, so it’s little wonder that many small businesses just don’t want the hassle of managing it themselves.

While technological advances have certainly eased many of the headaches involved with payroll processing for these businesses, the management issues are still considerable, and the potential penalties can add up quickly. So there will always be a need for payroll services. Fortunately, many options are available for these businesses, from do-it-yourself add-ons for small business accounting programs, to fully outsourced services performed by the major payroll providers. And then there’s the natural selection of who could provide these services: the business’ public accountant.

The market for professional-level payroll programs continues to broaden, with dozens of options available that range from fully web-based programs that provide secure client interactivity through portals and other technologies to more traditional, locally installed applications. A few developers even offer hybrid systems that enable management capabilities by the accountant, but generally are intended for direct use by the small business. Technology vendors also offer filing and compliance services.

For this review, we looked at more than a dozen payroll systems, including programs geared toward high-volume payroll service providers, as well as those that are designed for smaller firms who treat payroll as an adjunct service to a few clients. Pricing is widely varied, so professionals looking for a payroll solution need to determine their needs and then look carefully at the specific capabilities of a program.

Advances in technology have brought payroll services back into the hands of professional accountants. And the good news is that payroll doesn’t have to be difficult or time consuming anymore, which means it can be a profitable service for a professional firm.

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