2007 Review of Payroll Systems

Modern payroll preparation systems offer fully-automated processing functions
that let users simply enter employee time and accrual data, add bonuses, tips,
new deductions or other information, with the program performing all calculation
tasks when it’s time to pay employees. The continued adoption of direct
deposit has been a big relief, saving businesses as much as $0.50 to $0.60 per
employee by removing paper and check delivery from the process, while also eliminating
the need to reprint lost checks and diminishing the time that employees spend
at the bank. Newer additions to this feature also allow direct deposit for unbanked
employees, with their paycheck funds electronically deposited onto debit cards,
which frees them from usurious check cashing fees and decreases the risks they
face walking around with too much cash.

The continued movement toward online capabilities has extended to the payroll
arena, with programs offered both as online or traditional applications. The
most advanced payroll systems even provide secure online portals for employee
self-service, allowing them to view prior pay stubs and W-2s, as well as to
make requests for time off or notify payroll and HR personnel of changes to
their personal information like dependents, address and filing status.

Other features being rapidly embraced are electronic filing and payment of
state and federal tax returns, liabilities and workers’ compensation funds
from within the payroll system. Many programs include due-date management functions
that notify the user of pending tasks and provide prompts to process forms and
make payments. More advanced systems have started adding the ability to also
make electronic payments to non-government entities, such as child support withholding,
insurance premiums and garnishments. Because of the close relationship between
payroll and human resources benefits that are based upon payroll or time worked
(like deferred savings accounts, hospital plans and vacation and sick leave
accruals), payroll systems also provide varying levels of support for these
tasks but with automated workflow processing capabilities that greatly ease
these functions.

There is a broad array of payroll processing options available for professional
firms to offer their clients. Options include totally hands-off systems where
the business client provides the accountant with basic employee timesheet data.
Other options provide systems where the business client performs most of the
processing work, including check printing, but with the professional having
access to the payroll program to provide review services and to be able to import
transactions for write-up and reconciliation tasks. Still other options allow
the business client to outsource virtually all tasks to the accounting firm,
while the accounting firm also outsources the functions to an accountant-friendly
payroll service provider. The result is client payroll services branded as a
service of the accounting firm, with all client contact and billing handled
by the practice.

In prior years, we have reviewed professional payroll programs in two review
sections, based partly upon on how the software was used as well as on the role
that payroll services played in the professional firm. For firms with a strong
focus on payroll as a key service offering to most of their clients, we reviewed
systems that enabled these firms to work as a payroll service bureau. For professionals
to whom payroll is a peripheral function provided to only a few clients, a separate
review section explored programs more suited to payroll services on a more limited
scale.

This year, we have combined these groups into a singular payroll review resource,
with each product rated on several areas of program functionality: Ease of Use/Data
Entry, Features, Reporting Capabilities, Integration/Import & Export, and
Relative Value. The Relative Value section of each review specifically identifies
the type of professional practice most likely to benefit the most from implementation
of a specific program. 

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