|Payroll issues continue to create headaches for many business owner-managers – but new methods of payroll delivery are providing some welcome relief. Glenn Baker reviews the payroll systems and services market.|
Managing payroll functions for any size business can be a complex process, with a myriad of potentially confusing rules and regulations to contend with. And it can be a major challenge keeping up with new developments.
So choosing a payroll package and support provider that best suits the needs of your business is absolutely paramount. Get it wrong and your headache could quickly turn into a migraine!
‘Pain points’ or challenges for businesses, according to the industry experts, generally centre around holiday pay calculations, especially average earnings, KiwiSaver, record keeping – and generally getting the pay done accurately and on time.
“Our payroll seminars focusing on holidays and KiwiSaver are some of the most popular features of our education programme,” reports MYOB general manager Julian Smith. “Which highlights the number of Kiwi business owners that need support in managing this aspect of payroll.”
Payroll is often viewed as a necessary evil by business owners, says IMS Payroll general manager Patrick Hegarty. “Generally the attitude is the more quickly and efficiently the payroll can be processed, and at the least cost, the better.”
Payroll is not a company’s core business, he says, so the less you have to think about it, the better.
So what additional payroll compliance issues have raised their ugly heads in 2009 to test the mettle of your payroll person?
Hegarty says holiday pay continues to be an absolute minefield for businesses, and maintaining the necessary level of understanding can be an expensive process.
April 2009 saw more changes to rules relating to the KiwiSaver scheme, tax cuts, new Independent Earner tax credits, to name just a few. No major changes to the KiwiSaver scheme are scheduled for 2010 – however, there are likely to be significant increases to the ACC Earner levy which will impact PAYE.
2010 sees the introduction of a new charitable donation scheme, Payroll Giving, which allows employees to make voluntary donations to registered charities and claim an immediate tax credit at source. Hegarty says Payroll Giving is a major one for New Zealand’s registered charities – although it will be very much driven from their end. Applicable since January 6th, it is still the employer’s choice as to whether the facility is offered, he says.
There is also potential for changes to the Holidays Act at some stage during the year, says MYOB’s Smith. “A working group is due to report to the Minister with recommendations, so it’s likely that legislation will be introduced.”
Meanwhile, the whole issue of payroll compliance remains an ongoing issue for SMEs, says iPayroll’s managing director Martin Gleeson. “However these can be substantially mitigated using IRD-authorised and listed PAYE intermediaries.”
He says often the primary reason new clients give for moving from an in-house payroll system to a SaaS (Software-as-a-Service) or ‘cloud’ model is the benefit of not having to deal with the unrelenting monthly filing and payment requirements of the IRD. “With PAYE intermediaries handling all ‘back office’ functions on clients’ behalf these problems disappear.”
Of course, mention of the SaaS model brings us to one of the most significant trends in payroll software since payroll went electronic – the move to online hosting.
The fact is, an increasing number of payroll system and service providers are now offering an online hosted option for clients – if they’re not doing it already, they soon will be, because it makes sense on so many levels. However, there are a number of factors that must be taken into account.
Martin Gleeson has witnessed the move by larger organisations from in-house payroll to SaaS delivery – “joining the small organisations that have been flocking to SaaS services for years”. In fact iPayroll was one of the online delivery pioneers, having developed a pure SaaS model utilising the Internet as a delivery mechanism in 2000 and 2001.
“Larger organisations tend to be bigger users of HR functionality, such as reporting groups for training and development, OSH and the like. Other enhancements like ‘Employee Self Service’ for online leave services, traditionally the sphere of bigger industrial software, have also become more sought after by these larger organisations in the SaaS space,” says Gleeson. He says iPayroll’s Internet Employee Payslip Kiosk will address this space from April.
Gleeson believes that the term ‘cloud computing’ is now superceding that of ‘SaaS’. “The progress of Xero has accelerated this process, especially in the online accounting space.
“Integration with iPayroll and Xero, for example, with the Internet being the integration mechanism, is now a popular way for organisations to manage these two key areas of business management.”
Another payroll provider also giving clients an option to access their payroll functions online is IMS Payroll.
“The new online solutions combine the security and control of an in-house payroll system with the flexibility and availability of the Internet, says Patrick Hegarty. “It also offers security for employees’ payroll information and will save businesses time and money.”
Businesses will notice a significant decrease in time consuming queries concerning pay and leave, he adds. “Employees can access all pay related activity, including payslips and leave request forms, by logging onto a secure website with their own password.
“For employees it’s an efficient and safe way to review and file payslips and check leave entitlements – no more leaving payslips around the office and no more returned email payslips,” says Hegarty. Time slips can be entered online, he adds, plus end-of-year earning certificates are immediate and can be accessed by staff without causing hassles for admin people.