Payroll and its associated compliance requirements can a complex and daunting task for many small businesses. Employees must be paid on time and their pay must be correct both in terms of work performed and compliance with Fair Work Australia and ATO requirements. All too frequently employers are not fully aware of their compliance obligations or have difficulty in keeping up to date with ever changing regulations.
A good quality Payroll software solution can provide immeasurable benefits in terms both of compliance and streamlining the administrative tasks. A cloud-based Payroll solution has the added advantage of providing online collaboration with a payroll professional to assist in trouble shooting. This blog post evaluates some of the cloud payroll solutions available for Australian small businesses.
Whilst Payroll systems can be very feature rich to meet requirements of a variety of businesses – the main features of a good quality payroll software solution include:
- Compliant with both Fair Work Australia and the ATO
- SuperStream compliance – this is already a requirement for businesses with 20+ employees and from 1st July 2015 businesses with 19 or fewer employees are required either to be compliant or demonstrate they are moving towards compliance
- Manage Leave entitlements and leave taken
- Process Overtime payments
- Allow for Multiple pay frequencies/schedules g. Monthly/Weekly/Adhoc and assign employees
- Enable Timesheet entry to calculate hours worked
- Automated banking via ABA file
- Employee Portal for self service of payslips, payment summaries, leave application and change of personal details
- Automatic Superannuation payments
- Links to ATO for TFN and Payment Summary lodgement
- Populate BAS and IAS with payroll figures
- Comprehensive Reporting
- Security – User Roles
- User Interface – ease of set up and use
Payroll software comes in three main streams:
- A component within the accounting software
- A third party solution seamlessly integrated to the accounting software
- A stand alone Payroll solution that may integrate with the accounting software
Firstly solutions that are a component in the accounting software or third party software seamlessly integrated.
The main SME cloud accounting software solutions all provide payroll solutions although QuickBooks Online uses the seamless integration of third party KeyPay as its solution. (KeyPay is also available as a standalone solution) I did however discount the payroll solution available with MYOB Essentials because too many of the key features were missing; notably there was no employee portal, ABA files for employee payments cannot be created, there is limited editing of payroll entries and no security/roles for Payroll amongst other shortcomings.
Reckon One which remains a lightweight cloud accounting system currently does not have a payroll module although this functionality is scheduled for release ready for FY 2016. Given the solution is promoted as a fit for projects users and given that Reckon will be engineering in much of the functionality developed for its desktop/hosted product it will be interesting to see how robust and in depth a solution will be delivered in the coming months.
Then in the standalone solutions, I identified the following three solutions targeted to small businesses and with the ability to link to cloud accounting software:
Following is a list of features that I checked for in each of the six solutions although I appreciate that often a simple yes/no may not indicate the depth of functionality provided or general ease of use.
CloudPayroll – Timesheets can be imported from csv files or third party software such as Deputy but start/finish times can’t be entered directly into Cloud PayrollWeb Payroll – I could set multiple payment frequencies but there was no functionality to run an adhoc payroll – which is frequently needed for terminations and new hires. Pay run editing was somewhat laboriousNotes
ePayroll – only one payroll frequency per company but I could do adhoc payrolls
And for completeness – some notes on the different pricing which does vary considerably between the products.
- Xero – The Premium plan for the whole accounting software is $60 per month and includes 10 employees, increasing by $10 per month per additional block of 10 employees. Over 100 employees will be $2 per employee up to a maximum of 200 employees.
- QBO – KeyPay is free for the first 10 employees then charged at $4 per employee per month or $6 for advanced Payroll which includes Awards.
- Saasu – The Medium plan for the whole accounting software is $40 per month which includes 20 employees. For up to 40 employees the total amount is $70 per month.
- ePayroll – The Plus package for 6-10 employees cost $39.95 per month and $69.95 per month for 11-20 employees.
- CloudPayroll – There is an initial Employee set up and training fee, then on an ongoing basis – there is a fee per payrun which averages out at $33.60 per month plus a $2 charge per employee so this is the most expensive of the three standalone solutions but is more geared to providing ongoing support.
- Web Payroll has a simple structure – $25 for 5 employees, $35 for 10 and $40 for 20 employees.
For organisations using cloud accounting software and with relatively straightforward payroll requirements, the integrated payroll solution provided remains the most effective solution with its single payment plan, integration to the accounts and a consistent user interface.
For those businesses that either do not use accounting software or want to run their payroll in a standalone cloud environment there are several valid options. I did find CloudPayroll and KeyPay to be the most functionality rich solutions whilst still being easy to use both in terms of set up and ongoing processing.
What is certain is that with compliance requirements becoming more onerous (One Touch Payroll is on its way), correctly set up payroll software especially cloud-based delivers real benefits to a business not only from the compliance perspective but also in streamlining the administrative tasks. Any business that is running a manual payroll system however small should give serious consideration to migrating to a software solution.