With 2014’s payroll tax rates pouring in to the Symmetry Software offices and payroll managers across the country in the thick of year-end, we decided to set our sights on 2014 and what trends payroll professionals across the country can expect to see. Among the experts surveyed, transition to cloud-based systems, paperless payroll, paycard proliferation, and the ever increasing complex nature of payroll were sited time and again as the most important trends to watch in payroll during the new year. Below we detail each payroll trend to watch and what it may mean for you and your business.
Cloud-Based and Paperless Systems Companies have been running paperless payroll for many years, but there is more than meets the eye when it comes to this fast growing trend. In fact, paperless payroll has become the predominant means for delivery and accessing paychecks and reports for employers and employees, and is expected to continue to grow in 2014. Susan Accardo, Partner at Accu Data Payroll, recalls how in the past, direct deposit was the first way employers were able to go paperless, but that left unbanked employees still needing a paper paycheck....and paystubs were typically still provided in paper form for those choosing direct deposit. Then Employee Self Service (ESS) websites came along, providing online access to employees to view their paystubs, change personal information, view withholdings and so forth. ESS sites also gave employers access to reports, eliminating the need to print and deliver. Most recently, payroll cards have taken the industry by storm, allowing employees without a bank account to use a company-provided payroll card to debit their pay at any bank, or use the card anywhere debit cards are accepted. This completed the 100% paperless payroll process - ultimately allowing employees and employers to stop printing checks, paystubs and reports completely. Accardo states, “Nearly 90% of our clients allow online access to payroll information already.” Chris Costello, Principal and Founder of CBG Benefits, points to the growth of companies adopting cloud-based software solutions that integrate HR, benefits, and payroll in addition to the paperless trend. Costello states, “Many of these systems are already being used in other areas of business—including marketing, sales, and operations. Companies should be prepared to consider the benefits that a cloud-based payroll solution could bring in terms of resources, costs, accessibility, and other key areas.”
Affordable Care Act 2014 will mark a milestone year in healthcare as many small businesses introduce options for their employees under Obama's Affordable Care Act. This law places additional administrative burdens on businesses of all sizes, with many requirements based on payroll. Jeff Hecht, President of SourceOne Partners, states that, “Payroll reporting is going to be the key to tracking various requirements and remaining compliant.”
Accardo further claims that it has been a challenge for many small business owners to determine what was required in order to comply with this new law. For example, employers with 50 or more full-time equivalent employees must offer affordable minimum essential coverage under the law. Tracking the definition of full time equivalent employees may prove cumbersome for employers particularly if their payroll and HR systems are not connected. If small business owners have not already linked their payroll and HR systems, many will seek out a solution to do so in 2014.
Paycard Proliferation Despite the controversial year that paycards have had, they are here to stay. Research firm Aite Group states that in 2012 $34 billion was loaded onto 4.6 million active payroll cards. Aite expects that to reach $68.9 billion and 10.8 million cards by 2017. Paycards eliminate the need to produce paper checks or even the need for the employee to have a bank account. Despite the bad press, there are however many benefits to both employer and employee in the use of pay cards. Hecht claims reduction in the costs of paper paychecks, including postage and overnight delivery expenses, bank service fees for stop payments for lost or stolen checks, fraud reduction, and the ability to make purchases and pay bills directly with no fees among the benefits.
Payroll is Getting More Complicated
Matthew Sampson, director of tax and compliance for Payroll Center, Inc. reminds us of the elephant in the room in that each year the payroll laws, rules, and regulations become more complicated. With this, employers are switching from in-house payroll to using a payroll provider. With a constantly changing tax structure, ensuring you are paying your employees taxes accurately is complicated. Take for instance North Carolina’s Department of Revenue, which left employers scrambling to collect a new NC-4 form from every employee by January 1st, 2014, by announcing this requirement only a mere month and a half before the new year. Not to mention those darn Pennsylvania Act 32 PSD codes and local taxes.
What payroll trends do you expect to see in 2014? Add to the discussion at Facebook.com/PaycheckCity.