Menu

Payroll Software Focused on Compliance

Payroll Processing Software Roundtable

Many things must be considered when selecting payroll processing software for your firm. One of the more prevalent is compliance. CPA Magazine gathered the thoughts of industry leaders in payroll processing on compliance and what pitfalls CPAs should avoid.

Chandra Bhansali Co-Founder and CEO of AccountantsWorld

Bhansali ChadraWhat are some major compliance considerations when selecting payroll processing software?  

Compliance is the most complex and time-consuming part of payroll processing. The most important consideration when selecting a payroll solution should be that it does most of the compliance work, including direct deposit, tax deposit, e-filing of tax forms, automatically on time – without anyone to manually triggering it. The software should also perform the printing and filing of W-2, W-3, 1099s, etc. in a batch mode to save time.

What is a misstep you have seen CPAs make when using payroll processing software?

A common misstep is that many CPAs don’t have the proper internal processes needed to run an efficient payroll practice. Another thing is that many accountants are still using desktop solutions, and it’s costing them a lot of time and lost profits that they could realize by using a cloud-based professional payroll solution.

 

Connie Martin President and CEO of Adaptasoft

Martin ConnieWhat are some major compliance considerations when selecting payroll processing software?

As the modern workplace continues to change and evolve, compliance concerns are equally dynamic. It may seem that the moment a compliance issue is resolved, a new regulation surfaces. However, several compliances remain fundamental. When your business is selecting a payroll processing software, it is crucial to ensure that these are met before any others – as failure to do so could result in serious legal consequences. In other words, these payroll compliances are nothing short of an absolute must.

There are two categories of compliances a business should consider when selecting a payroll processing software: legislative mandates and HR compliances.

Legislative Mandates
It is paramount that these legislative mandate compliances are present in the payroll processing software your business is considering:

• Labor laws
• Correct Classification of Workers
• Wages
• Income Taxes
• Employer Contributions: Social Security, Medicare, FUTA, SUTA
• Employee Deductions: Social Security, Medicare, and in some states SUTA
• Employee Contributions: Retirement Plans: 401K, IRA, Roth, etc.
• Third Party Sick Pay
• Garnishment of Wages
• These compliances are established to assure that your organization is abiding by both government legislation and industry regulations.

HR Compliances
HR compliances are also an important consideration. In order for your business to serve as the “one-stop-shop” for employers, a payroll service provider should strongly consider offering compliance tracking from the HR perspective, as these are closely integrated with payroll.

These HR compliances could include features such as:

•ACA Compliance Tracking
•Offering of Benefits
•Record of Timekeeping
•Onboarding-employee paperwork compliance, IE, I-9, W-4, etc.

No two businesses are exactly alike, which is why you should be familiar with the unique benefits and software features offered by different providers. Businesses should conduct thorough research when choosing a payroll processing software, keeping these mandates and compliances at the forefront of their purchasing decision. Doing so protects and empowers your business so you can plan for the future.

What is a misstep you have seen CPAs make when using payroll processing software?

Payroll processing software has transformed business operations across the globe, offering a practical solution that uses fewer resources while increasing productivity, accuracy and return on investment. However, with the growing number of businesses choosing to invest in payroll processing software, there are common missteps that can take place. These can be avoided with adequate planning.

One particularly common misstep that we see CPAs make when using payroll processing software is underestimating the flexibility of the payroll software and the vast complexity of payroll rules. When working with payroll, there are often multiple paths to a solution, with very specific rules that apply. The key is knowing precisely which path is correct in a given instance while still adhering to the rules of the payroll software.

For example, in order to account for the possibility of every imaginable type of deduction, we allow a user to specify which taxes do and do not apply to the deduction; it’s imperative that the user either understands the laws of the specific deduction and its associated taxes, or has access to a qualified individual possessing that knowledge. The scope of payroll processing can be incredibly different from what a CPA deals with on a day-to-day basis, such that further training may be required to become truly skilled with the processing software.

In order to get the greatest benefit out of your business’s payroll processing software, it is vital for every employee to be sufficiently trained and informed. This way, you can mitigate errors, avoid frustration, and equip your business for success.

 

Chris Rush Division Vice President of Strategy & Business Development, ADP Small Business Services of ADP

Rush ChrisWhat are some major compliance considerations when selecting payroll processing software?

There are several compliance considerations pressing on accounting firms and their ability to accurately process payroll for their clients. The changing composition of the workforce and employee classification, myriad local, state and federal regulations, meeting filing and deposit deadlines, and reporting worker’s compensation for annual audits are just some of the regulations making it imperative that accounting firms help ensure that their clients accurately manage compliance requirements. Offering a cloud-based, integrated, compliant payroll solution helps firms meet these obligations for their clients. It also provides them an opportunity to strengthen client relationships and benefit from additional, recurring revenue.

What is a misstep you have seen CPAs make when using payroll processing software?

One common misstep is failing to integrate a payroll solution with other service offerings. Advancements in technology not only are enabling accounting professionals to efficiently handle more payroll clients, they also are transforming how accounting firms integrate payroll with other services they provide their clients.

Accounting firms may benefit from presenting the entire scope of their capabilities as a comprehensive offering. This may help them enhance and deepen their client relationships, as well as position the firm to capture more of their client’s business as they continue to add relevant, valuable services.

Integrating payroll with other services can produce a steady, reliable stream of revenue and potentially lower general operating costs. It also may help smooth out revenue and staff workload throughout the year.

 

Ken Hilton President of Red Wing Software

Hilton KenWhat are some major compliance considerations when selecting payroll processing software?  

When selecting payroll processing software, it is important to make certain that the software can handle the myriad methods of calculating overtime. In addition to the standard federal definition of calculating overtime, many states have their own rules, and specific unions may have specific methods defined in their collective bargaining agreements.

What is a misstep you have seen CPAs make when using payroll processing software?

While CPAs are very good at processing payroll for their clients, it can be difficult for CPAs to keep up with all the changes that take place in their clients’ businesses with regard to employee status, pay rate changes, vacation/PTO pay, etc. This can inadvertently lead to payroll errors. One misstep I’ve seen is the lack of a good communication plan between the client and the CPA. With a solid communication plan, this can be avoided.

 

James Paille Director, Chief Compliance Officer, Corporate Secretary myPay Solutions of Thomson Reuters

Paille JimWhat are some major compliance considerations when selecting payroll processing software?

• Vendor’s ability to quickly get software updates to update the payroll provider’s tax engine and rates (cloud-based is preferred).
• Backed by security experts that have experience in delivering on the promise of keeping data secure and assuring client confidentially; a system that does not rely on emails, faxes, “external functions.”
• Immense depth and breadth of available federal, state, and local tax compliance forms and/or e-filing abilities.
• Secure and proven ACH and banking process.
• Ability to mask and control personably identifiable information.

What is a misstep you have seen CPAs make when using payroll processing software?

• In-house processing approach, staffing for payroll, but only providing payroll as a courtesy to 10-20 clients. It’s a loss leader without building the client base beyond 70-80 clients. New opportunities exist to keep control of the client, yet not have to be invested in the day-to-day tasks and still make money.
• Know your niche; do not elephant hunt or take on clients outside of your expertise or comfort zone. Properly qualify your prospects in the sales process.

Assuming that current bookkeeping and tax staff can perform the payroll service needs with accuracy. Hire payroll experts for your operations.

 

Ken Garen President of UBCC

Garen KenWhat are some major compliance considerations when selecting payroll processing software?

The major considerations should be:

• Is the software designed for payroll service bureaus or single company use? For example, can you run all of your 941s from a batch process instead of one by one.
• Can you change the software’s behavior for only one client and not affect other clients?
• Can you have custom enhancements made and have those enhancements included in future revisions of the software at no additional cost?
• Does the software have pay-as-you-go workers compensation and will it work any broker or just the one that software company works with?
• Does the software have a sophisticated automatic billing module for your fees?
• Can you combine multiple clients into one file for direct deposit and child support payments?
• Can you impound and track funds for taxes and/or full gross to net to effectively compete with ADP and Paychex?
• Can you do daily bank reconciliation of your impound bank account?
• Can you easily customize reports for clients?
• Can you include historical checks in a new customized report?
• Can you import cleared checks into your bank reconciliation?
• Does the payroll fully integrate with the GL and BK? And does it allow you to select different client IDs to use for EFT, GL and BK?
• How quickly can you run on new technology?

What is a misstep you have seen CPAs make when using payroll processing software?

• Not considering the productivity of different software and its effect on their profit.
• Only considering the cost and not the benefits of the cost/benefit equation.
• Not considering how much computer infrastructure is needed to run the software.
• Not considering if the software is designed to allow for multiple users to be in the same client at the same time.
• Not considering if the software will have performance degradation as historical information is added.
• Not considering how easy is it to import and export information.