Online payroll services are designed to overcome the major obstacles that prevent accountants from offering simple, profitable, and manageable payroll services to their clients.
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Unlike PC-based solutions, online payroll systems require no downloads or updates, and provide a collaborative environment in which the accountant can provide oversight and services while enabling the client and the client's employees to handle the data input and updating.

By doing so, payroll Web sites open new opportunities to serve the 5.1 million businesses in the U.S. with fewer than 20 employees (89 percent of the employer market). And it provides a more effective solution to the nearly 80 percent of small businesses that currently process their payroll manually, as well as the 46 percent of accountants that currently refer clients to another service to process payrolls.

Online payroll processing is a robust and growing market, with a field of excellent products aimed at companies with 200 or fewer employees and the accountants that serve them. Our review of the industry for 2003 finds seven sites worthy of attention.

EasyPayNet

ADP is the oldest and most heavily referred payroll company in the United States, with 50 years of experience and more than 450,000 corporate clients.

The company offers multiple Web-based payroll solutions on two levels. For companies with from one to 49 employees, there is EasyPayNet, part of the company's Emerging Business Services Web site.

EasyPayNet, Version 3.2

ADP's Emerging Business Services Division Parsippany, N.J. (973) 952-7000 www.ebs.adp.com Price: $32.50 for filing 5 weekly employees, payroll tax filing and delivery. Clean and graceful in its interface and navigation, EasyPayNet offers the standard features for online payroll plus many of the more complex payroll features-from suppressing direct deposit to handling multiple pay rates within a single pay period. Navigation is via a set of links from the index page that follows the standard format for payroll, employee data, company data, reports, and additional services.

What makes the EasyPayNet site a real standout is its exceptional support services for small businesses. In addition to a robust help system, EasyPayNet offers Frequently Asked Question resources on 180 searchable topics, as well as guidance on payroll and tax filing issues. Somewhat more modular than some competitive products, its enhancements to standard payroll services include the ezCheck module for generation of paper checks, reporting via ezReports, a Checkview feature that allows viewing of previously issued checks, full-service direct deposit, printing of electronic signatures, and downloadable year-to-date reports.

Also of note is the attention that ADP pays to the role of the accountant in working with small companies. In addition to allowing accountants access to payroll data and providing data export and general ledger interface, the EasyPayNet site is launching new services for MICR check printing and enhanced electronic reporting capabilities.

ADP does offer a product for midsized companies that wish to have an online payroll capability. The ADP Pay eXpert service provides secure, Web-based access for major accounts, with free translation of legacy payroll data and secure access to the system from any Web browser.

ADP offers an excellent resource for small companies through EasyPayNet, and a more robust product for companies with more than 49 employees or more complicated payroll scenarios. Pricing is again dependent upon a large number of variables, but the introductory package for EasyPayNet, combined with its features for accountants, should make it worthy of note to CPA and bookkeeping firms.

Paychex

Paychex is a company that has garnered an impressive set of accolades in recent years both for its business performance and its products.

Founded by B. Thomas Golisano in 1971, it made Fortune Magazine's list of the top 100 best companies to work for in America, while simultaneously earning kudos from The Wall Street Journal as one of the top 25 companies returning value to shareholders over a 10-year period. Forbes named Golisano personally as one of the top 10 bosses in the nation for the second consecutive year in 2003.

Paychex Online Payroll

Paychex Rochester, N.Y. (800) 322-7292 www.paychex.com Price: $31.40, average cost for weekly payroll, 10 employees. Paychex has grown aggressively in the past three decades through both acquisition and internal development to serve some 475,000 clients nationwide-mainly small to medium-sized businesses with fewer than 200 employees.

The online service, Paychex Online, which debuted in November 2001, is a tightly integrated suite of Web-based services that encompass payroll, a paperless reporting service, online timesheets, and an interface to post payroll data into popular general ledgers. Supported ledger programs include Accpac, Creative Solutions, MYOB, Peachtree, and QuickBooks, in addition to manual integration with other accounting programs.

The online payroll application is straightforward and easy to navigate, with capabilities to handle complex issues such as multiple rates of pay-though it could use an updated graphic look and crisper fonts. After the initial setup-which includes installation of Java into the browser and setting screen resolution to 1024x768-the input of employee data and generation of paychecks is a simple exercise of filling in the blanks.

As impressive as the core program is the array of additional services provided for small businesses-from assistance in electronic payment of payroll taxes to handling of 401(k) plans and worker's comp. There are even referral sources for employee assessment, pre-employment screening, health insurance, and other small business services. As an added control feature, companies can give their accountants access to the online data at no additional charge.

Paychex Online is an excellent implementation of payroll processing over the Internet. The sheer flexibility, security, and processing power of the site are impressive and well suited to the target audience of companies with 200 or fewer employees.

PowerPayroll

PowerPayroll is a secure, Internet-based payroll and tax filing service from Paymaxx, the nation's seventh-largest payroll processor. Aimed at companies with 100 or fewer employees, it is part of a suite of payroll and human resources services that has evolved since the company's formation in 1991.

Major elements of the service are nationwide tax filing at the federal, state, and local levels, direct deposit, direct import of time and attendance information, online reports, multiple earnings and deduction codes, preparation of year-end W2s, and spreadsheet import and export.

PowerPayroll version 5.0

PayMaxx Franklin, Tenn. (877) 729-6299 www.paymaxx.com Price: $12 per payroll processing (weekly, bi-weekly, and semi-monthly); $10 tax filing per state (optional); $15 per payroll processing (monthly). PowerPayroll features a sharp, attractive, and intuitive interface with eight major navigation tabs. These are PayDay, for submitting payrolls, checks, and voids; Employees, for adding or editing employee information; Company Info; Customer Corner, a support, contact, forms, and information resource; Reports, for managing checks and payroll reports; General Ledger, for exporting information to Excel, ASCII, or QuickBooks format; PayView, for reviewing check stub details and W-2s; and Employee Self Service, which allows the client company's employees to edit and update their own information.

In addition, other links on the index page of the service direct the user to an online payroll guide, the Power401K service, and a payroll reminder service for payroll and tax filing deadlines. At the bottom of the page, a PowerPayroll guide to year-end processing provides information on closing out the previous year and setting up payroll services for the year ahead.

Pricing is competitive with other online payroll services, and is based on the number of employees, frequency of payroll, number of printed checks, and other variables. Pricing information is clearly spelled out on the site, as is the option to reduce costs by computing and managing the payroll online by printing and distributing the checks in-house.

In February, PayMaxx introduced its current iteration of the site, version 5.0. Among the new features included are a Web-based CheckPrint utility, multi-level security features, enhanced deduction control at payroll time, and new formats for report exporting. And the company is enhancing its offerings for smaller companies (from one to 10 employees) with a new Xpress Payroll online product next month.

PowerPayroll is designed to be sleek and straightforward, with other services-human resources, benefits, and others-drawn from its service bureau and PC-based products. With an award-winning design and powerful feature set, PowerPayroll is very appealing for companies that wish to scale their services upward as they grow.

PayChoice Online

PayChoice Online is a relative newcomer to the field, launched last year and offered today by about 75 service bureaus nationwide. The online implementation of the company's PayChoice PC-based system, it is aimed at companies that want professional back-end services in addition to the timeliness and convenience of a Web-based management system.

This emphasis on service-bureau support makes PayChoice Online ideal for accountants who wish to offer payroll services to their clients. The Web site is hosted by Payroll Associates, with the service bureau's name, logo, and choice of color scheme. Clients are able to view their company and employee information, make personnel changes and additions, enter their payroll information, settle their totals, run a gross-to-net preview (not required), and, when it is completed to their satisfaction, submit their payroll for processing. Helpful wizards make the processes easy and fast.

PayChoice Online

Payroll Associates Moorestown, N.J. (856) 231-4667 www.paychoiceonline.com Price: $7,000 typical initial annual cost. Payroll data is transferred to the service bureau as 128-bit encrypted files, secured with Secured Socket Layer (SSL) protection guaranteed by Verisign. Payrolls are automatically processed, and the Web server is then updated with the new master files. An email is sent to the employer informing them that the payroll is complete, along with a full set of electronic report files, check stubs, or live checks if preferred.

PayChoice Online features a clean, attractive interface that is easy to navigate and use. What makes the service exceptional is the level of detail available-particularly in terms of employee data. In addition to the standard level of data, this service captures sick-time accrual, the employee's training history, I-9 citizenship data, military status, and security clearance information-data that is normally relegated to human resources software but is essential to many small companies.

Payroll data is presented in one of two views-pay detail or pay grid. The Pay Details screen is designed to show the complete pay information for a single employee, and is suited for payroll that requires frequent overrides, such as department splits or temporary hourly rates. The Pay Grid is a faster view designed to present the "big picture" view of all employees along with the five most common pay codes used by your company.

PayChoice Online may be a new service, but is already an impressive site that can only get better as capabilities for human resources, timesheets, and a general ledger interface to QuickBooks become available in the fall of 2003. For accountants looking to do payroll for clients, this should be one of the first services considered.

Powerpay

Ceridian was founded in 1932 as the first payroll processing company in America, and today holds the position of the third-largest payroll and HR services company in the world. The company's Powerpay online payroll service was the first of its kind, introduced in 1998.

Powerpay is not a stand-alone product, but rather the core of the company's suites of small business services, Ceridian Business Express and Ceridian Business Elite I.

Powerpay

Ceridian Minneapolis, Minn. (800) 937-2996 www.ceridiansmallbusiness.com Price: $28.40 per processing. The Business Express suite provides online payroll processing, tax filing to federal, state, and local tax authorities, direct deposit, payroll reporting, and a trial subscription to Ceridian's "Abstracts" newsletter. Premium and optional services include management of worker's compensation and unemployment compensation taxes, 401(k) and flex plan administration; employee assistance programs, time and attendance products, compliance products, recruitment screening tools, and business insurance.

Business Elite I offers all of the services of the Business Express suite, but adds an additional dimension of work/life balance and employee self-service. The Human Resources self-service module allows employees to complete time sheets and view basic time off and pay stubs online, while offering modification tools and reports to managers and administrators. The Employee Effectiveness module provides employees with work/life balance consultation and materials accessible via the Internet.

Navigation on the site is via a main page with eight links, for Payroll, Employees, Reports, Company Information, Log In, Log Out, Partner Offerings (for optional employee screening, insurance, benefits management, and other services), and a Help System. Once in one of the primary sections, navigation is via standard tabs along the top of the screen. Data input is by import of an Excel spreadsheet as well as manual entry and updating, and data can likewise be exported in Excel and CSV formats.

Powerpay presents a more extensive reporting function than most of its competitors, offering not only the processed payroll summary, 401(k), and tax reports, but also a loan balance report, GL accounting totals report, and check reconciliation report. The reports section also permits the downloading of payroll files to Quicken or Microsoft Money, or integration of the data with QuickBooks.

Ceridian's suites provide two robust online payroll services to companies of from one to 100 employees, with additional offerings to cover compliance issues and other necessary services. A strong contender for small companies looking to outsource their payroll, this is also the only offering that specifically deals with cross-border employees in Canada.

SurePayroll.com

SurePayroll has positioned itself as the value service in online payroll processing, using a streamlined structure and innovative pricing to attract companies not yet staffed with a full-time HR department. SurePayroll lays claim to being the largest of the online payroll processing services in the U.S., with more than 7,500 customers in all 50 states.

SurePayroll lives up to its billing as a simple and effective online implementation. Navigation is conducted via five tabs along the top of the site or by links along the left side of the page. Calling up payroll information allows the administrator to adjust and preview the payroll, then see the payroll cash requirements and the date the money will be withdrawn from the company bank account prior to approving the payroll.

SurePayroll.Com

SurePayroll Skokie, Ill. (877) 954-7873 www.surepayroll.com Price: $25.95 per payroll plus $1.25 per employee. The payroll reports include 401(k) totals, benefits, pay stubs, and quarterly tax and W2 information, with two years of historical data displayed for reference. Employees are paid by direct deposit or with a physical, MICR-encoded check. SurePayroll also offers an employee self-service that allows each employee to view their pay information online, print copies of pay stubs, and view balances for vacation, benefits, withholding, deductions, and 401(k). The payroll data can be integrated with the QuickBooks or MYOB general ledger programs.

Pricing for SurePayroll is less complicated than with most online payroll solutions -just $25.95 per payroll plus $1.25 per employee transaction for clients with biweekly or semi-monthly frequencies.

This pricing includes direct deposit, all tax filing and tax payments (federal, state, and local), quarterly returns, unlimited customer service, and the employee self-service functionality.

Of special interest to accountants is the "Custom Payroll Service for CPAs"-a turnkey solution that lets accountants offer a "branded" Web-based payroll service to their clients with their own pricing.

Simple, functional, and well crafted, SurePayroll is an excellent package for accountants looking to offer payroll services, and for small companies that want a professional payroll service but can live without the human resources and more advanced services required by larger firms.

PayCycle

PayCycle is an economical Web-based payroll solution designed to make payroll services profitable for accountants.

The service allows accountants to manage multiple payroll clients from within a single dashboard view accessible from a single login. It permits the accountant to decide whether they or the client will perform employee setup and data entry. And the program exports paycheck data to most small business accounting packages, including QuickBooks, QuickBooks Online, Quicken, Microsoft Money, and Microsoft Excel, eliminating the need for data re-entry.

PayCycle 2003

PayCycle Palo Alto, Calif. (866) 729-2925 www.paycycle.com Price: Basic service, $19.95 per month (up to 5 employees), $0.99 per month each additional employee. Plus service, $39.99 per month (up to 5 employees), $0.99 per month each additional employee.

For one low price, the accountant has the ability to generate dynamic to-do lists and email reminders, direct deposit and local printing, electronic filing of federal tax filings and payments, and state payment and filing forms.

Unlike the majority of online payroll services, pricing for PayCycle is uncomplicated. The accountant can choose to pay $10 per client per month and charge what they wish, or they can offer one of two standard packages billed by PayCycle-a basic service for $19.95 per month for up to five employees and $0.99 per month per employee over five, or a "plus" service for $39.99 per month for up to five employees and $0.99 per month per employee over five. The "plus" service includes state tax payment and filing forms. For both services, there is no limit on the number of payrolls run each month. Direct deposit, federal electronic tax payments, federal electronic tax filings, and electronic W-2s are offered at no extra cost with both services.

PayCycle, a clean, simple program, contains all of the elements necessary to process payroll, pay payroll taxes, and create useful reports. But its focus is on the accountant rather than the company president, so the information is organized somewhat differently. In addition, the service makes better use of the knowledge and experience of the accountant to deal with the complexities of unusual payrolls, rather than trying to cover all of the possibilities within the Web site itself.

PayCycle is well suited to its mission of serving the accounting market, and should be at the top of the list for accountants wishing to make their payroll services better and more profitable.

Dave McClure is president of Kent Associates of Alexandria, Va.