UPDATE 1- Paychex to buy closely held SurePayroll for $115 mln

* To expand into the online market for small businesses

* Deal to not have impact on Paychex' full year earns

* Deal expected to close by the end of CY 2010

Dec 9 (Reuters) - Paychex Inc (PAYX.O) said it agreed to acquire privately held online payroll processor SurePayroll Inc for $115 million in cash to expand its offering in the online market for small businesses.

Paychex said it does not expect the deal to have a material impact to its revenue or earnings for the full year ending May 31, 2011.

Surepayroll, which serves about 30,000 small businesses with its online software-as-a-service (SaaS) payroll product, is expected to post a revenue about $23 million for 2010.

SurePayroll also has a variety of channel partners, such as Citibank (C.N), Harris Bank, and SunTrust Banks Inc (STI.N), which provide the company's offerings to their small business customers through private-label and referral agreements.

Harris Bank is a unit of Bank of Montreal (BMO.TO).

"The online market for small business is a fast-growing part of the market that we believe will continue to thrive," Chief Executive Martin Mucci of Paychex said. Paychex, which competes with larger rival Automatic Data Processing Inc (ADP.O), is aiming to convert businesses that do their payroll manually into clients. There are millions of businesses in the U.S. with fewer than five employees each currently doing their payroll manually, the company said.

Shares of the Rochester New York-based company fell 1 percent to $30.09 in early trade on Nasdaq. (Reporting by Archana Shankar in Bangalore; Editing by Jarshad Kakkrakandy)