With the increased availability and growing awareness of comparatively affordable, efficient and collaborative products and services, firms are increasingly discovering (or rediscovering) the benefits that payroll can bring to a firm.
For many firms, offering payroll services is more of a value-add for their clients than a direct revenue generator. More often than not, the difficulties of running a payroll practice had not justified the investment, leaving some to get out of offering payroll all together. Below are several examples of how firms found viable alternatives to the payroll products and services they had once offered, allowing them to generate a valuable service and act as more of an advisor to their clients.
Firm: DeMoss Accounting / Chattanooga, Tenn.
Size: 6 staff
Commencement date: October 2011
On record: John DeMoss, president (DeMoss)/director (Decosimo)
Challenge/objective: To reduce the level of stress on staff, payroll typically having been time-sensitive and involved, particularly at year's end.
Amount spent: $30,000-$35,000 per year.
Process: DeMoss Accounting is part of a larger area firm, Decosimo Accounting and Bookkeeping Services. When they merged in 10 years ago, they were able to keep the name and focus on the client base they had built.
DeMoss' manager had been asking him for a few years to look into using an outsourced service like Paychex, and he finally entertained a meeting with them in 2011. The firm had been using server-based accounting software to do client payroll, bill payment, accounting, and payroll tax returns, but overall found it "cumbersome."
"I wanted to understand the cost and the process. The quality was there, but so was the stress level," said DeMoss. "Any firm that does payroll knows this, so we finally decided to look into Paychex."
DeMoss admitted that moving from a software they had been using for years to a service was a process, but they had planned to transition clients over the course of a year beginning in the fourth quarter of 2011. Paychex created a portal where the firm could log in with their user ID and password and see all clients on the system at once. They could then select who they wanted to enter hours for, submit the batch and have Paychex "take care of the rest." The firm also had set up an internal process for entering and reviewing the data.
DeMoss said that he could submit a batch for payroll processing at 5 p.m. and have the paper checks at 8 a.m. the following day. The firm usually tells clients there is a three-to-four-day turnaround period in case there are any issues.
"Overall, the [transition] process went smoothly. We got a certain amount in the system during the fourth quarter and we kept moving clients over. I had to think about cost too: Some clients were on fixed fee and I had to talk to Paychex and they were able to come up with a scalable price list that was fair, less than half of what a normal company would get directly from them," said DeMoss.
Moving over to Paychex wasn't entirely without its glitches; DeMoss recalled one in particular where the office moved and some payroll checks were sent to the old location. He stressed that Paychex "did everything they could to remedy the issue," specifically giving them the mis-sent batches for free. "Overall service and processing, I got high to very high ratings from my staff on using them," said DeMoss. "There were also some integration issues with our accounting system, but we're working through those with them."
Results: DeMoss said that his goal of reducing stress at the end of every quarter and year-end has been achieved. "I had people not showing up for work at the end of a quarter or for year-end payroll because they were so stressed. That doesn't happen anymore."
The firm now has 90 percent of its clients that need payroll on Paychex. He also noted that they do not need as many people for the work. "In total, I can't say we're saving money, but it's about the service and the stress is lower, [and] managers are more productive so we can offer more levels of service," said DeMoss. "We've had a hard time billing what it's really worth, but we wouldn't change it. If you have 25-50 employees or up to 200, you have to have some kind of a system that is very reliable. This one really works for us."
Next steps: The firm is looking for better integration with some of the software that it uses for its accounting work. They would also like to see more customizable reports.
Firm: Moy, Borchert, Erbs & Associates / Baraboo, Wis.
Size: 50 staff
Product: Apex Payroll
Commencement date: August 2012
On record: Payroll administrator Donna Billhorn
Challenge/objective: To grow the payroll practice, and give clients the ability to access reports and do more themselves.
Amount spent: Pricing varies by volume.
Process: The firm had a fair-sized payroll practice with approximately 550 clients on it, but was finding that they wanted to be able to provide more than they were using. They had been receiving specific requests from clients on the kinds of payroll reports they wanted, and also realized that they wanted clients to be able to do some of the work on their own and access what they needed when they needed it.
One of the partners began researching and came across Apex while at a conference he had attended. After reviewing it, the firm decided it could be the right fit.
Given the number of payroll clients on the old system, it took nearly a year to move them all over, beginning with ones who were "easy enough that didn't have as much history" and adding more in over the course of the year.
"There were certainly some bumps, clients asking for specific reports and we would have to go back to Apex and request the information they needed," said Billhorn. "For the most part, they were able to get the information we were looking for. Sometimes clients weren't used to seeing things a certain way and we had to adjust that, but overall it does what we needed it to do, like if we needed a W-2 a certain way."
Results: With all of its payroll clients now on Apex, the firm in October began selling the service, and added 15 clients in that month. Billhorn noted that quarterly reports are going "much faster" and as her staff becomes comfortable with the system, she expects that will improve even more. She also noted that the payroll practice is "a decent size" for the firm, and that having it is "more of a value-add service for our clients."
Next steps: More selling of the service and learning more features like time-keeping and HR, not just payroll
Firm: Automated Only / Dover, Pa.
Size: Sole practitioner
Product: Intuit Full Service Payroll (Intuit Inc.)
Commencement date: October 2011
On record: Owner Jo King
Challenge/objective: Had clients asking for the firm to get back into payroll services, which the firm had stopped doing as it was becoming more difficult without being more involved in the clients' payroll process.
Amount spent: Free.
Process: King had offered quarterly and year-end payroll services "for years," but was finding it increasingly difficult, particularly at the end of the year when she would get more tax calls that would take priority and attention away from payroll. She stopped offering payroll, but had enough clients who "weren't doing it right on their own" and talked her back into offering it again.
She has been "very connected" to Intuit for years and is currently an Advanced ProAdvisor. King was introduced to Full Service Payroll when it was first released and was told she could put the first three clients on it for free for a year. At first there were some difficulties getting some clients to use the system, specifically those that required job costing as - at the time - Full Service Payroll did not offer that feature. It was later added and King was able to move more clients on; meanwhile, she did enjoy that Full Service Payroll integrated well with QuickBooks, while some other payroll systems that she had looked at did not.
King also liked that if there were any mistakes entered into the system, she could pull up that specific paycheck in QuickBooks and make changes.
"I also like that I could call Intuit when a client was ready to go on the system, Intuit could then call the client and I am done," said King. "They send e-mails to help set-up, they walk through problems. I get to use the Accountant version and I can see the data and make sure it's all right, so if they want to call me to explain anything I can and that's billable time to me."
Results: King currently has five clients on Full Service Payroll, and while it's an important aspect of her practice, she claims that offering payroll is not specifically about the bottom line. "I don't do it for money - I do it as a stress-reliever for my clients and myself," said King. "Intuit lets me stay involved and be a true trusted advisor to my clients."
Next steps: King wants to convert as many clients as possible to Full Service Payroll.
Better than before
Firm: Barnes Saly & Co. / Johnstown, Pa.
Size: 15 staff
Product: Payroll Relief (AccountantsWorld)
Commencement date: January 2012
On record: Staff accountant Jennifer Wagner
Challenge/objective: Efficiency in a payroll system and to make sure items were being paid and calculated properly, particularly in a state with difficult payroll taxes.
Amount spent: $997 for the first year, unlimited payroll, then $0.45 -$1.25 per check.
Process: The firm had been looking for a payroll processing company that would provide modern technology, unlike the one that they had been using. They also needed some efficiencies in the system, as payroll was difficult in their state, which requires businesses to pay federal, state and local payroll taxes.
More specifically, the previous program the firm used did not have cloud capabilities, direct deposit, or electronic tax filing, all of which it wanted to have. The firm's accounting supervisor and head of the payroll department conducted a search and read about Payroll Relief in a trade magazine. The product appeared to have all of the key features the firm wanted and the price came to only $1 per check, or $.80 per check if they went over 7,000 checks in one year. "It did not take any convincing for the partners to agree to the product, because they were already looking for a replacement and this product had such a reasonable price," said Wagner.
She said that the system is very user-friendly, with help screens on each screen you go to. AccountantsWorld also offers webinars to keep users updated on enhancements, as well as a support team that "will return calls in the same day."
Wagner noted that the flow of the system "made sense" and was very intuitive. She said that she was able to set up specifics per company, and that there is also a "suggestion" part of the system, which AccountantsWorld responds to.
In addition, Payroll Relief has electronic filing, so tax payments and payroll reports go through automatically. To learn the system, she watched a webinar that gave instructions on setting up an employer and employee and saw all the parts of the system she needed to use. Wagner said that she was able to use Payroll Relief well in the same day.
Results: The firm currently has 30 live payroll clients, and has expanded the service since they started using it. Wagner noted that the firm has added more clients to Payroll Relief recently, and has had to expand the staff because of the increase in its payroll business. Specifically, she noted that the payroll practice has grown by about 20 percent over the past year.
Next steps: The firm is actively marketing the payroll service.
Firm: J.D. Frost & Co. / Chattanooga, Tenn.
Size: 4 staff
Product: RUN Powered by ADP Payroll for Partners (ADP)
Commencement date: February 2013
On record: Managing partner Jonathan Frost
Challenge/objective: The firm had clients that were starting to ask for payroll services, but hadn't done it much in the past. It also needed something cost-effective that didn't take up a lot of time.
Amount spent: Costs can range from $30 per client for the DIY version to $100 for the full tax filing and HR.
Process: Frost worked for a regional CPA firm up until about a year ago, when he formed his own practice. He had little interest in doing payroll and wanted to focus more on tax and advisory work for his clients - but he quickly realized as he started taking on clients that they were asking for payroll services. He had considered ADP as an option, since they offer full-service payroll, and learned more about the RUN Powered by ADP Payroll for Partners product when a representative came to his office. Frost felt that it made sense for him to put his clients on it; he "also didn't have to hire anyone that knew payroll, since they have the expertise and the brand."
Frost said it was "very easy" to set up. His ADP representative gave him a form with a list of questions to send to his clients to help set up their individual payrolls. After completing the forms, the ADP representative took care of the set-up and it was "simply a matter of telling ADP when they can start the first payroll." He noted that it only took two days from set-up to the first payroll run.
"We can go online, the client is there and we can see them all set up, put in the hours, preview it and hit approve," said Frost. "From the time it's set up to processing payroll it takes 10 to15 minutes, depending on the employees. On larger clients, they enter the hours and we review it and approve it."
Results: The firm currently has five clients on the service, totaling approximately 60 employees. He has also started to pick up work from companies that just want Frost to do payroll because their CPA firm doesn't.
"Clients really appreciate the lower cost of it all and how they can access the same information I have anytime they want. Also, you get an overnight package of checks and summaries and they are surprised at how fast and efficient it is," said Frost. "For me, this is more of an additional service. I find that I don't talk about tax as much; I talk about payroll and more business advice. I can now say to them it's easy, you use ADP. If they do payroll on their own they run the risk of getting tax penalties and other fees and problems."
Next steps: Frost plans to actively market his payroll practice going forward.
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