Payroll can be 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 compliant with industry regulations and tax law.
All too frequently employers are not fully aware of their compliance obligations or have difficulty keeping up to date with ever-changing regulations.
A good quality payroll program can provide immeasurable benefits in terms both of compliance and streamlining administrative tasks. A cloud-based payroll solution has the added advantage of easier access for a payroll consultant who can troubleshoot problems as they arise.
This post evaluates some of the cloud payroll solutions available for Australian small businesses. Here are the main features of a good quality payroll software solution, by category.
- Regulatory: Compliant with both Fair Work Australia regulations and the Australian Taxation Office (ATO) requirements.
- SuperStream (superannuation): This is already a requirement for businesses with 20+ employees and from 1 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 (eg. monthly, weekly, ad hoc) and assign employees.
- Online timesheets 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 lodging tax file number and payment summary statements.
- Populate activity statements (business and instalment) with payroll figures.
- Comprehensive reporting
- User roles that restrict access to areas such as bank details.
- An interface which is easy to set up and use.
Payroll software comes in two main streams. A component or tightly integrated module in cloud accounting software, or a stand-alone payroll solution that may integrate with cloud accounting software.
The main SME cloud accounting programs all include payroll. QuickBooks Online uses a seamless integration of third party app KeyPay as its solution. (KeyPay is also available as a standalone solution.)
I discounted the payroll solution available with MYOB Essentials because too many of the key features are missing. Notably there is no employee portal, no ABA files for employee payments, limited editing of payroll entries and no user roles for payroll, among other shortcomings.
Reckon One currently does not have a payroll module although one is scheduled for release in FY 2016.
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. Often a simple yes/no may not indicate the depth of functionality provided or general ease of use.
Some comments on the applications listed above:
CloudPayroll: Timesheets can be imported from csv files or third party software such as Deputy but start and finish times can’t be entered directly into Cloud Payroll.
Web Payroll: I could set multiple payment frequencies but there was no functionality to run an adhoc payroll. This is frequently needed for terminations and new hires. Pay run editing was somewhat laborious
ePayroll: Only one payroll frequency per company but I could do adhoc payrolls.
The Cost of Cloud Payroll
The pricing varies widely for different cloud apps. Let’s take a look first at the accounting programs which include payroll.
Xero: The Premium plan is A$60 per month and includes 10 employees, increasing by A$10 per month per additional block of 10 employees. Businesses with more than 100 employees pay A$2 per employee up to a maximum of 200 employees.
QuickBooks Online: The Plus plan costs A$17.50 a month and the first 10 employees are free. Extras cost A$4 per employee per month or A$6 for advanced payroll which includes awards.
Saasu: The medium plan is A$40 per month which includes 20 employees. For up to 40 employees the total amount is A$70 per month.
For comparison, here are the prices for the payroll-only apps.
ePayroll: The Plus package for 6-10 employees cost A$39.95 per month and A$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: It has a simple structure. $25 for five employees, $35 for 10 and $40 for 20 employees.
For businesses with relatively straightforward payroll requirements, the integrated payroll in a cloud accounting app remains the most effective solution. It has a single payment plan, integration to the accounts and a consistent user interface.
Businesses that don’t use accounting software or want to run payroll separately there are several valid options. I found CloudPayroll and KeyPay to be the most functionality rich while still being easy to use both in terms of set up and ongoing processing.
As compliance becomes more onerous (One Touch Payroll is on its way), payroll software set up correctly set delivers real benefits to a business. Not only from the compliance perspective but also in streamlining the administrative tasks.
Any business running a manual payroll system no matter how small should seriously consider migrating to a cloud app.
This article first appeared on the Cloud Accounting Buzz blog.