Despite the perceived, and often experienced, difficulties in having a payroll practice, more firms are adding it to their list of service offerings as they are seeing the near- and long-term benefits to their clients, as well as their own practice.
For many firms, payroll has historically been both costly and time-consuming to run. But with more reasonably priced technologies and services -- many of which are in the cloud -- firms are finding that payroll can be cost-effective to run and lead to new client generation and potential future revenue as clients look to accountants for more than just tax and compliance work.
Below, several firms give their recent experiences with offering payroll as a service.
One step ahead
Firm: Gideon Adler & Co. / Fair Lawn, N.J.
Size: 5 staff
Commencement date: January 2010
On record: Principal Oren Adler
Challenge/objective: Needed a service that could be accessed 24/7 and was easy to use for its younger, entrepreneurial clients.
Amount spent: Free for CPAs.
Process: Adler has offered after-tax payroll services since the firm's inception, but with new payroll reporting rules and client demand for services, he set out to find a payroll product that worked best for his firm and base of growing companies.
Adler came across SurePayroll at a conference; upon seeing a demo, he realized that the product met all of his requirements for a payroll service. "They have an Android app so I can approve items when I'm not in the office; I have control and access to data I need and the product overall has all the benefits the big guys used to offer, but at a lower price and I get to make some money too," he said.
Adler admitted it did take a bit of time to set up, but nothing too significant; more important, communication with the SurePayroll representative "was constant."
"We were up and running on it pretty quickly and I have to say the product is comparable to the big guys," he said. "Pricing is very straightforward, I can adjust my pricing per client, include them as part of overall services; I've got many options. And we use them too for our own payroll."
Results: While the payroll service only offers "a minor revenue stream" in and of itself, Adler sees the long-term potential and advantages of simply being able to offer payroll.
"It's great when I get a new client and it also helps create brand loyalty between me and my clients, and keeps them coming back to me," he said. "All we preach is service, and when a client comes on it allows me to do more for them. There are cheaper products that businesses can use themselves, but those tend to cause more problems than benefits."
Next steps: Adler said that he feels the company is "one step ahead" of where he needs to be and is unsure of where he would like SurePayroll to go: "I'm just looking to get more clients on it."
Second time around
Firm: Christopher J. Seling & Associates Inc. / Bel Air, Md.
Size: 5 staff
Product: Run Powered by ADP Payroll for Partners (ADP)
Commencement date: January 2012
On record: Principal Chris Seling and office manager Pam Brooks
Challenge/objective: The firm had sold its payroll practice, but clients wanted it to get back into the business.
Amount spent: According to ADP, standard pricing for the full service is $60 per client per month, plus a nominal per-check processing fee. Scaled-back service offerings are available for less.
Process: Back in 1991, the firm formed a separate payroll group, and in 2010 decided to sell it to ADP. Shortly after the sale, ADP introduced the firm to the Run product and over the course of the year more clients were requesting that the firm offer payroll services, enough so that by the end of 2011 it became a Run Powered by ADP for Partners user.
"It really wasn't too hard to use, it took a client or two to get really familiar with it," said Brooks, who oversees much of the payroll practice. "I was able to use prior numbers, but I admit I was a bit leery to do their first payrolls of the year on it. I knew what needed to be in there, though, and it went fine. They were doing payrolls by the end of that week."
Seling also advised that anyone just switching over to a new payroll service should start with existing client data, rather than placing new clients in a new system right away. "It's also easy when you do tax planning work - you have the right information there for you to use," he added.
Results: The firm now has 30 clients on Run, and the payroll business accounts for 10 percent of the firm's bottom line.
"With the ADP software and our service, it's been a great marriage. We're in a situation with clients that were happy we were back in [the payroll business] because they wanted everything in one place," said Seling. "It's just been great for us because we don't have to ask clients for more paper, we can just record it all once, and the [payroll] practice is a profit center for us."
Next steps: The firm would ultimately like to have all of its clients onRun, but Seling admits some simply like to do their own payroll. Realistically, he believes he can add 30 clients per year over the next three years.
Firm: Global Tax Management / Cincinnati
Size: 2 staff
Product: Payroll Relief (AccountantsWorld)
Commencement date: Summer 2011
On record: Owner Jason Feist
Challenge/objective: The firm was not as happy with the online payroll product it was using and wanted an alternative, particularly something with few limitations and exceptional automation.
Amount spent: A new client on just Payroll Relief -$1,000 unlimited payroll, then $195 a year and $10 per payroll run.
Process: After some frustration with its current payroll product, Feist happened to speak with an accountant friend who mentioned that he used AccountantsWorld. His friend was also getting ready to retire and wanted Feist to take on his payroll clients. Feist agreed - but had some questions.
"I used to do payroll taxes for a regional bank so I know payroll, but I wanted something that didn't have limitations and gave me the automation I was looking for so you don't worry about forgetting anything," said Feist. "[Payroll Relief] did that quite well."
Since it was an online product, there was no installation. He was also able to import all of the history from his old product in a .CSV file. He then notified all of his clients on some changes, which they did not seem to mind, according to Feist. He advised that anyone switching to a new payroll system should allot approximately two to three weeks.
"Also, it automates payroll tax filings and payments and all states," said Feist. "They also have something called a Swipe Clock add-on where you can integrate time clocks - just click a button and import employee time. It's an easy add-on and we get a revenue stream from that, as well."
Results: The firm earns a 70 percent profit on each payroll it does versus what it spends on Payroll Relief, and since switching from the previous product it has more than doubled its number of payroll clients. But Feist sees an even greater value to the product beyond the revenue it earns. "It allows us to give tremendous value and service over a payroll bureau - it has also allowed me to add additional services as well as revenue," he said. "You can make money at this if you do it right."
Next steps: "We are working on getting in front of more businesses; it's another nice way to get in new clients and build a relationship," said Feist. "With payroll you can do 401(k) plans too, we do wealth management and we also do accounting work, but having [a payroll service] starts the conversation [with potential clients]."
A full-service firm
Firm: Fast Trac Consulting / Richboro, Pa.
Size: 2 staff
Product: Intuit Full Service Payroll (Intuit)
Commencement date: January 2012
On record: Owner Gita Faust
Challenge/objective: The firm was doing some payroll work but was struggling every month with journal entries and much of the payroll process. They wanted to streamline the process and still have some recurring revenue every month.
Amount spent: Free for Intuit resellers.
Process: Faust is an author on QuickBooks materials and the firm is also an Intuit partner. She was made aware of the Full Service Payroll product when it launched and decided it might be worth having clients use it.
"We took a good look at the pain points of our clients and realized that this service was one of the simplest time- and financial-saving solutions for them," said Faust. "The thing that really sold us was that it calculated local payroll taxes, the integration to QuickBooks was seamless and direct deposit was included. It's also fast - you can process payroll for 10 employees in under five minutes .... And since we already had access to [clients'] back-office [data], it makes us more of a full-service firm." Faust also liked that Intuit handled all the necessary set-up for her clients, and that switching from another payroll service was as easy as sending the necessary payroll reports to the Intuit FSP team, with payrolls processed by the following pay period.
Results: Currently 20 percent of the firm's clients are on FSP, and though Faust's bottom line is still approximately the same as before it switched to FSP, she enjoys the recurrent revenue stream and found that she is "spending less time on client issues and more on growing our client base." In addition, she noted that some of her clients switched from other "big name" services to FSP and saved over $600 a year.
Next steps: Faust is looking to increase the amount of FSP clients, even if her firm does not do their bookkeeping. "We can still sign clients up and get some revenue from that," she said. "There is phone and e-mail support, so clients can contact Intuit directly with any issues. This saves us time."
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