Payroll and The Internet: One Way Of Reducing Overhead

February 2001

by Edward Poll, J.D., M.B.A., CMC

Processing payroll can be a headache. Make a mistake or be delayed because of a trial or other client obligation, and you will have h... to pay. Make a mistake and you will not be forgiven. Get it right and no one pats you on the back. If nothing else,, employees expect to see an accurate paycheck each pay period.

Large or small, all firms have to deal with payroll. While the larger firms usually have a staff person dedicated to payroll issues and tax compliance, many smaller firms do not. In these cases, it is often the senior partner or even a spouse who manages payroll. For some business owners, processing payroll in-house is the bane of their existence. For others, they gladly pay the higher fees for outsourcing so that they can spend billable hours on their clients. Competition for this outsource service is keen, though limited. Large companies such as ADP and Paychex provide "hard copy" services that either direct deposit payroll for employees or deliver checks to the firm for signature and personal distribution to employees. The Internet is now providing us with yet another choice.

Take Bill Gibson, an attorney with a solo practice and a small staff in Portland Oregon. He juggles his time between clients, cases, trials, and managing his practice. He also serves as Vice Chair of the American Bar Association Law Practice Management and is often invited to speak at various legal conferences. "I knew I didn't have the time to manage the payroll myself but I had certain requirements that needed to be addressed before I would consider switching to a payroll service," says Gibson. "I needed the flexibility to run payroll on my timetable which can sometimes be late at night or early in the morning. However I wasn't interested in using a payroll software package because I didn't have time to keep up to date on all of the tax changes." He wanted the flexibility to enter payroll from anywhere and at anytime. If he wanted to add a bonus, change a pay rate or simply make changes to an employee's basic information, Gibson wanted the ability to modify the information with instantaneous results.

What finally drove him to outsource his payroll was when he found a company that gave him the flexibility and control of software solution, combined with the convenience and hassle-free functionality of an outsourced solution. Better still, the price fit into his budget. He chose because it offered something that no other payroll company provided: 100% Web-based payroll service.

With a web-based payroll system, the customer decides where and when to update or view the employee's hours. "It's great. I no longer need to worry that I am not in the office on payday." By leveraging the speed, flexibility and convenience of the Internet, offers a flat fee of only $19.95 plus $.50 per employee per pay period. That's half the cost of many other payroll services. Employees like the service because they no longer need to be in the office on payday. Each employee can log into the web site and view their current pay stub, previous pay stubs, even vacation and personal time. For employees who want or need a printed check, has developed a patent-pending technology that allows the customer to print a check from the web site to a local printer in their office without downloading any software or installing any hardware. This is advantageous for the firm because it can use its existing supply of checks, with continuing check numbers, for the payroll. There is a seamless stream of numbering without the need to print another supply of checks at additional cost. All the firm administrator/managing partner has to do is go to the Web site of SurePayroll and hit "print"; the check(s) start flowing. And a record is maintained for the firm's accountant, as well.

Advantages of outsourcing payroll:

For most law firms, the number one reason to outsource payroll is the time saved. This allows them to spend billable hours on their clients and not on managing the office. Outsourcing also makes sense if you do not have time to keep up to date with the changing tax laws and other payroll issues. Many small businesses find themselves faced with stiff IRS penalties as a result of mistakes or delays. Accurate tax reporting and payment is usually guaranteed with payroll companies.

Another convenience of outsourcing payroll is delivery. For legal professionals who may not come into the office every day -- whether it's because they are on trial, at a document review or simply working at a separate location -- the hassle of delivering pay checks and direct deposit stubs can be eliminated. Employees simply log on to the secure web site at any time and from any location to view or print their pay stub.

What To Look For:

There are competitors to SurePayroll. Some of them can be seen at the following URLs: ADP, Paymaxx,and Ceridian. Selecting the right provider for you depends on a number of factors. The following checklist provides a starting point for your consideration:

Checklist for Picking a Payroll Provider:

  • What is the cost for your service for 1 year, including W-2 forms?
  • If I need to change some basic employee information such as address or pay rates, how quickly do the changes take place? What is the procedure?
  • Is your system simple to use or do I need specific training?
  • Does it cost extra to file taxes for multiple states?
  • How do I enter my payroll data? Do you offer an Internet option?
  • Does the basic service include tax filing and payment, direct deposit, printed checks and quarterly reports?
  • How can you ensure accuracy of the data? Do you offer a payroll preview before submission?
  • Can you track vacation and sick days for each employee?
  • Do you offer department codes?
  • Do you guarantee no IRS penalties -- as long as the information provided is accurate?

As in other areas of practice, the profession is being impacted by the Internet. And, in almost every aspect, the cost of operating the practice is decreasing. This is one more area to review.

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February 2001