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MasterTax: A Hanesbrands Case Study

Automating Payroll Taxes: How Hanesbrand maximized efficiencies and eliminated manual labor in their payroll tax compliance process with MasterTax

Customer Facts

  • Headquartered in Winstom-Salem, NC
  • Has one FEIN, doing business in 46 states and 211 localities
  • Runs Lawson Payroll, Accounts Payable, and General Ledger version 8.0.3
  • Approximately 12,500 active employees located in the United States
  • Number 510 in 2008 Fortune 1000 list

Customer Overview

Hanesbrands, Inc. is a global leader in apparel essentials, including T-shirts, underwear, hosiery, casual wear, and active wear. A recent survey found that Hanesbrands apparel is found in eight out of 10 American households. Brands owned and manufactured by Hanesbrands, Inc. include Hanes, Champion, Playtex, Bali, L’eggs, Just My Size, Barely There, and Wonderbra. A subsidiary of Sara Lee Corporation until September 2006, Hanesbrands has over 100 years’ experience in the apparel industry. The Hanesbrands payroll department runs Lawson for all of their payroll needs.

The Challenges

Eliminating manual processes
As Hanesbrands, Inc. grew, both in employees and locations, the resources required to ensure payroll tax compliance grew exponentially. The Lawson payroll system had no automated way to complete the necessary tax compliance process. This led to manual processing; all payroll tax compliance was done utilizing spreadsheets. These manual processes substantially increased the likelihood of two major potential problems, manual keying errors and the amount of time needed to pay and report their taxes.

Inefficient use of available resources
Hanesbrands established a process for their employees in the payroll tax department, however without true automation, an employee could only handle a limited amount of the workload. Hanesbrands was looking for a way to grow their business without exponentially increasing their payroll tax staff.

The Discovery of MasterTax

After an exhaustive search of payroll tax software companies, Hanesbrands, Inc. selected MasterTax as their solution. Hanesbrands chose MasterTax due to several important factors:

  • User-friendly system
    Hanesbrands found MasterTax to be the most user-friendly system available on the market. Reports, request forms, tax returns, and other output is generated in a convenient, easy-to-use process. This gave the Hanesbrands staff confidence that they could get up and running quickly with a short learning curve.
  • A comprehensive package
    As Hanesbrands evaluated each payroll tax software vendor in terms of features, functions, and overall completeness of their product, it was clear that MasterTax had the most to offer. MasterTax covers all aspects of payroll tax compliance, including scheduling, paying, balancing, and filing.
  • Customer references
    Hanesbrands spoke with several customers of each of the vendors that they investigated. Of all of their vendors, MasterTax customers seemed to be the most happy with their choice. Customer service was a central theme in the references’ satisfaction. The immediacy and accuracy of response from the MasterTax Customer Support staff was noted by each MasterTax customer.

Implementation

Implementation of MasterTax began mid-year (July). The entire process was completed in 6 weeks and consisted of the following components:

  • Company master setup
    Each individual company and all of their tax jurisdictions were setup in the MasterTax system. Information, such as tax rates, deposit frequencies, account numbers, etc. were entered into the software. Hanesbrands also chose to enter A/P vendor and general ledger account numbers to make tax payments and G/L reconciliation more efficient.
  • Previous history setup
    Since Hanesbrands was implementing mid-year, all previous payroll tax data from January to June needed to be input into the MasterTax system. This ensures that when it comes time to do annual reconciliations and returns, MasterTax will have all the history data needed to complete the task.
  • Interface between Lawson and MasterTax
    MasterTax relies on the customer’s payroll system to provide tax liabilities withheld and calculated to complete compliance. As a result, an interface to exchange data between Lawson and MasterTax was needed. Hanesbrands implemented FOY, a product created by Cal State Development for data exchange. FOY takes a file export from Lawson and converts it to a file format recognized by MasterTax. The Hanesbrands staff also created an interface between MasterTax and Lawson Account Payable system to electronically transmit tax deposit information for invoicing and payment, as well as subsequent reporting to the General Ledger.

Results

Elimination of errors
Automation of the payroll tax compliance process eliminated all manual keying of data. The issues of transposing or forgetting to enter data are no longer a concern thanks to MasterTax and the FOY interface. Since Hanesbrands has been using MasterTax, they have not received any penalties or interest as a result of the payroll tax compliance process!

Increased efficiencies
Hanesbrands immediately saw an increase in efficiency thanks to the automation all their payroll tax compliance steps. The manual spreadsheets have now been replaced by electronic file imports and automated report generation. At quarter-end, it used to take the entire month to complete reconciliation, tax return generation, and reporting; it now can be completed in only two weeks. By combining the FOY interface with MasterTax’s reporting capabilities, all reporting tasks became automated, including generation of unemployment wage reporting e-files and magnetic media in the formats required by each individual taxing authority.

All the data in one place
Prior to MasterTax, in order to get a clear idea of their payroll tax position, Hanesbrands needed to cross-reference multiple spreadsheets. Now, through MasterTax liability and deposit reports, Hanesbrands can quickly gather data from one system. All tax returns generated by MasterTax may be recreated as originals at any time without going back into archives. All confirmation numbers of tax payments and check numbers are entered into MasterTax and may be easily retrieved through reports and menu items. The accessibility of data has dramatically improved over their previous methods.

Maximized resources
The implementation of MasterTax has allowed Hanesbrands to fully maximize and utilize their resources in other important areas. They have not only saved money by not paying penalties and interest, but their tax specialist (whose sole responsibility was payroll tax compliance) is now processing bi-weekly payroll in addition to payroll taxes. Should that tax specialist go on vacation, Hanesbrands can plan tax payments in advance using MasterTax’s deposit payment feature. Using this feature, the tax specialist can mark a tax deposit to be paid on a future date, process it, and send it to the bank. The effective date of the payment is set to the due date of the payment. Therefore, even though the tax deposits are sent early, money will not be withdrawn until the due date, thereby maximizing interest on their tax liabilities.