Payroll and HR solutions.

To help CPAs further their understanding of payroll and human resource administration functions, we consulted with leading solutions experts for their perspective on trends, developments and predictions shaping the future of advanced payroll and HR management technologies.

Joining us this month are: Walter Turek, Senior Vice President, Sales & Marketing, Paychex, Inc.; Richard Watson, Vice President, Product Management and Accounting Services, ADP Small Business Services; Dr. Chandra Bhansali, President & Co-Founder of Accountants World, LLC; Jon Baron, President & CEO, Thomson Creative Solutions and Rene Lacerte, Co-Founder and CFO, PayCycle

Executive Roundtable

Gentlemen, why is now such an important time in the arena of payroll processing and administration of HR functions? RICHARD WATSON (ADP): Today's small businesses face increased regulation, from complex taxes to new hire reporting. Payroll experts can help organizations fulfill their compliance responsibilities and reduce their risk of fines and penalties. Outsourcing is a cost-effective way that small businesses can transfer the responsibility for administrative tasks, so they can focus more time on building their business.

WALTER TUREK (Paychex): I agree. In today's competitive business environment, the outsourcing of payroll processing and HR administration allows employers to focus on what they do best--running their businesses. As laws governing payroll and HR become more complex, and as HR expectations rise among employees and recruits, it makes more and more sense for an employer to let a third-party expert handle such functions, so they can concentrate on their businesses.

RENE LACERTE (PayCycle): Accountants now have the opportunity to add a year-round revenue stream that can have a meaningful impact on their firm's bottom-line. According to a recent survey by the National Payment Corporation, go percent of small-business owners indicated that they prefer their accountant to handle payroll, particularly to ensure compliance with government filings and tax principles.

JON BARON (Creative Solutions): Advancements in technology are making it easier than ever for accounting firms to offer service bureau level payroll services to their clients with little investment of labor. For example, today it is possible for a typical accounting firm to adopt a completely paperless payroll process, which Ill discuss in more detail shortly.

DR. CHANDRA BHANSALI (Accountants World): Without question, payroll is an accounting function. However, in the past accountants were forced to refer their clients who needed payroll services to service bureaus simply because accountants did not have access to the tools they needed to process payroll efficiently. The Internet has changed all that. Today there are accountant-centric payroll processing centers that give accountants the same power and automation that was previously available only to payroll service bureaus.

What are the most important trends you're seeing today when it comes to outsourcing payroll, HR and benefits administration?

Turek: I'd say it's the demand for a complete comprehensive payroll and HR offering in which a customer is confident that a single vendor can provide multiple employee options. Additionally, employers are looking for that one source to quickly and efficiently retrieve the information required to manage their employees -information included in payroll and HR data and in reports.

Watson: We're increasingly seeing small businesses outsource administrative functions beyond payroll. This includes 401(k) administration, time and labor management, workers' compensation and employee screening. Outsourcing multiple functions can reduce the administrative workload of performing these functions in-house.

Baron: Actually, the trend we're seeing is that more accounting firms are deciding to offer payroll services to their clients themselves. The Internet is making it possible to make many payroll functions paperless and to achieve much faster turnaround. This results in more loyal and satisfied clients, matched with increased efficiency and cash flow for the accounting firm.

Lacerte: Likewise, we're observing greater adoption of in-house, on-demand payroll services by accounting professionals who previously chose to outsource payroll. Our customers have found that their previous concerns about payroll being tedious, time-consuming and unprofitable are no longer true.

Bhansali: Agreed. We believe more and more businesses will move to outsource their payroll services to accountants, who can offer them more personalized, customizable, professional service than service bureaus can.

What are the most common concerns or misconceptions that CPAs may have today about referring clients to outside payroll providers?

Watson: When selecting payroll partners, accountants should make sure the organization offers the same level of service and accuracy that the client has come to expect through the accountant relationship. Accounting professionals should seek service providers who are financially secure, with a sound business footprint in the industry. And of course, check their references carefully.

Bhansali: Many CPAs cling to the perception that they cannot offer payroll services profitably and hassle-free. This is no longer true. The sooner these CPAs understand today's realities and the opportunities that payroll now gives them, the better off they will be.

Turek: The most common misconception CPAs may have is about price versus value when referring clients to a national payroll provider. The value inherently lies in the CPA's freedom to concentrate on larger revenue-generating business while an expert handles the payroll, tax payment and HR functions.

Lacerte: CPAs who outsource client payroll have two primary misconceptions. First, they believe that payroll is too difficult and time-consuming to handle in-house. Second, CPAs sometimes believe that they cannot make a profit from in-house payroll. In our case, we offer accountants a wholesale pricing option of $14.99 per client per month, plus 25 cents for each employee per month past the first five. Accountants can charge their clients whatever price they like, thus creating a year-round source of profits.

Baron: I see two misconceptions about referring clients to national payroll providers. One is that the CPA firm cannot offer top-quality payroll services themselves, and two is that it is labor intensive to offer payroll services. While there may have been some truth to this in the past, advancements in technology have made it as easy today for accounting firms to offer full payroll services, including direct deposit for employees (even pay cards for un-banked employees), cafeteria type benefits, and private portals for employees to view pay stubs, W-2s and W-4s online and more.

Why are CPAs optimally positioned today to advise their clients on complex payroll and HR administration functions?

Baron: Research indicates that most small-business clients prefer their accountant to handle their payroll service. They view the accountant as a trusted adviser who can manage the complex requirements of a payroll system, allowing the client to focus on operating his or her business. When accountants provide payroll services, client satisfaction and loyalty increase dramatically. And the accounting firm experiences increased year-round cash flow and higher profits.

Watson: True. Today's small businesses are increasingly looking to their accounting professional for advice on all types of business functions--from tax and payroll to HR and employee retirement plans. Accounting professionals are finding that they have many resources, inside and outside their firms, available to help them service these needs. Today, service providers, software providers and resellers are tailoring offerings to accountants to help them assist their small-business clients.

Lacerte: Accountants are their clients' most trusted financial advisers and most clients expect a full-service relationship. Accountants who provide on-demand payroll differentiate themselves from competitors and open the door to other client services such as write-up and financial analysis, tax preparation, software consulting and financial planning.

Bhansali: Accountants already have a thorough understanding of their clients' businesses, and most CPAs already have a good knowledge of the prevailing federal, state and local reporting rules that govern payroll compliance for each client. Because of their training, it is much easier for CPAs to acquire any additional expertise that they might need.

Looking ahead over the next several years, what new products and services do you expect to be offering CPAs and their small-to medium-size clients?

Turek: Paperless employee pay products, employee screening and broader retirement services options for small businesses.

Lacerte: Our mission also is to make paper-based payroll obsolete. We'll continue to add electronic state functionality to all 50 states, more robust e-mail reminder functionality, enhanced accounting software exporting, MICR blank check printing, 1099 payments and co-branding of services. Baron: Private, secure portal services so CPAs can have 24/7 online access to their clients' tax and accounting documents and services.

Are there any final message points that you would like our readers to take away from this roundtable discussion?

Turek: Paychex is proud to be the preferred payroll provider of the Paychex Partner Program from AICPA Business Solutions. We've expanded our offering through AICPA Business Solutions to include payroll services for larger, more complex businesses and 401(k) record- keeping services.

Baron: At Creative Solutions, we believe the cumulative impact of what we call the "Big Three"--Integration, Paperless and Web--will bring revolutionary changes to the accounting profession over the next several years. The combination of these technologies enables the accountant to provide a higher level of service to their clients, while at the same time producing dramatic increases in productivity and significant decreases in costs.

Lacerte: PayCycle is leading a paradigm shift in the payroll industry by offering accountants a robust, inexpensive and easy-to-use payroll solution for their clients. Traditionally, smaller businesses have been faced with the difficult choice of manually handling payroll themselves, with great risk of penalties for mistakes, or outsourcing payroll to a national payroll provider at great expense.

Watson: The accountant community has been and continues to be a valued partner for ABE We are committed to providing accounting professionals with the tools and resources they need to serve the needs of their clients and grow in their profession.

Bhansali: The most important development of the last decade--the Internet--and this decade's emerging development--the dawn of the accountant-centric era--will have a more profound impact on the profession than even the PC revolution has had. Accountants World believes that the sooner CPAs adapt to the new reality of this decade, the more they will profit from it.