Payroll companies add services

By Molly Altorfer, correspondent

As the Internal Revenue Service institutes increasingly complicated business tax laws and stiffer penalties for companies that err in reporting, payroll services have found their expertise in greater demand.

And with that increase in clients, traditional payroll service companies have expanded their offerings to include tax pay and filing, background screening, drug testing, timekeeping, direct-deposit, paperless payroll, workers' compensation services and human resources consulting.

Linda Haas, who has run Cedar Rapids-based Future Systems Inc. for 18 years, confirmed the increase in customers seeking tax pay and file and contended it is due to the challenge small businesses have in keeping up with tax regulations.

“With our tax pay and file service, they know their taxes are being paid on a timely basis,” she said.

Carrie Faudel, principal at Iowa City-based Latta, Harris, Hanon & Penningroth, agreed that “the compliance and complexity” of tax laws are encouraging companies to outsource.

“The large penalties aren't worth it,” Faudel said. “It is easy for us but harder for them.”

“The price of our service for a year is less than one penalty from the IRS,” Haas added. Future Systems employs seven at its Cedar Rapids headquarters.

Kyle Kunz, partner and Cedar Rapids branch manager with Honkamp Krueger & Co., with nine regional locations and headquartered in Dubuque, sees a trend in the industry because of compliance. Many businesses “are looking at the (tax and payroll) service being outsourced to handle the complexity and last-minute changes,” he said.

“A majority of the companies we serve come for the payroll,” Kunz noted, but will bundle in additional services.

As these payroll companies expand the services they sell, they're increasingly seeking employees who are customer service-oriented and who are a good fit culturally. In fact, hiring for personality and communication skills trumps accounting or human resource experience, they said.

“We can teach the payroll side of the business, but (the candidate) needs to have the hidden talent of customer service,” Haas said.

Faudel noted that Latta, Harris employs some 50 people throughout the year and will add 20 seasonal employees during the tax season.

“We will do training if the person doesn't have it, but most important is the ability to communicate and work with people,” she said.

Kunz added that his company is “going away” from the traditional hiring practice of basing interviews and job offers on resume and grade-point average. Now, he said, “we look for personality and commitment to the company.”