July 1999 Issue


The increasing trend toward outsourcing payroll functions is evidenced by recent announcements from two nationally recognized companies, Automatic Data Processing, Inc. (ADP), and Staples, Inc. Whereas ADP is known for its human resources services, Staples' alliance with InterPay, a Massachusetts-based payroll processing company, marks its first foray into payroll services.

Staples, the national office supply retailer, is seeking to expand its range of services to small businesses. Will individual Federal income taxes be next?

"Customers told us that they want to focus on their core business rather than worry whether their payroll was complete or whether they accounted for employee taxes correctly," said Lisa Tanzer, director of small business development for Staples. "We see this as an opportunity to take a tedious task off the plate of the small business owner or office manager."

An estimated eight to 10 hours a month are required to process the payroll of a business with less than 20 employees. The IRS reports that more than a third of small businesses are penalized for not complying with tax regulations. Staples is betting that it can save small businesses that time and money by drawing on InterPay's expertise in payroll processing.

Staples' Interpay will be marketed through all 750 Staples superstores and its mail-order catalog. The service will process payroll, file taxes, and offer retirement plan options. Staples' InterPay will assume liability for timeliness and accuracy of tax payment. More information is available at (888) 208-7996.

In moving into the payroll services arena, Staples will be competing with ADP, an established leader in the field. ADP recently announced it has extended its "Year-End Connection" website on tax information and renamed it "ADP TaxMatters." The new site will offer year-round information on tax issues and updated information relevant to small employers.

ADP's site aims to be a round-the-clock, one-stop information center for small business owners and office managers. It extended the site in response to positive feedback on its Year-End Connection, which provided essential information to tax practitioners during the close of the season. TaxMatters posts updates on Federal, state, and local laws; offers shortcut aides such as deposit calendars, standard forms, and reports; and provides helpful links to other web-based tax resources. *

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