Case Studies: Payroll
With accounting firms adding payroll as a value-added service or spinning off whole practices to address their clients’ payroll-related needs, the market for customizable payroll solutions is expanding. The solutions and services these firms choose to adopt are often client-dictated, ranging from small-business-focused internal software to enterprise-level outsourcing.
We spoke to five firms about how they are growing their payroll business through five different providers.
The right fit
Users: 30-40 clients
Product: Gusto (formerly ZenPayroll)
Commencement date: 2014
On record: Founder and CEO Nick Pasquarosa
Process: While still in the process of ramping up the solution for clients, bookkeeping and accounting firm Bookkeeper360 began recommending Gusto after the payroll provider added more attractive features like workers compensation and health benefits and became available in more states. Bookkeeper360 partners with ADP for larger clients, but in its year-long relationship with Gusto has found it to be a good match for a specific kind of client.
Bookkeeper360’s two payroll partners serve “two different clients,” Pasquarosa said. “The much bigger clients are not a fit for Gusto, and those clients are on ADP. Small business, pre-revenue clients are a great candidate [for Gusto].”
With those clients, usually 20 employees or less, the implementation process is all online, “super simple,” and aided by Gusto’s “great support,” Pasquarosa shared. The average set-up time is a day.
Advantages: Gusto’s customer support is especially useful when clients have issues or need anything expedited. Pasquarosa also touts its usability: “It’s extremely easy for small-business owners to understand and use. It works great on mobile. It’s not the whole complex payroll set-up but uses layman’s terms … you don’t need a four-year degree in accounting to understand it.”
Challenges: From clients, “the biggest complaint is funding time,” though Pasquarosa said Gusto is working on improving cash flow to compete with the likes of ADP, which provides next-day funding. The company is also addressing other concerns, like the complications of multiple pay rates and pay structures, and “reimbursements can be a little cumbersome.” But Bookkeeper360 has a “really good relationship with Gusto. They’re open to hearing feedback.”
Next steps: Bookkeeper360 will continue to build their core marketing around the Gusto service, which will include partnership cobranding. The firm also aims to streamline the client onboarding process.
Users: Hundreds of clients using ADP, 12-36 using ADP TotalSource
Product: ADP TotalSource
Commencement date: 2000
On record: Shareholder and director of emerging business Henry Silva
Process: While Top 100 Firm KLR has had an exclusive relationship with ADP for at least 15 years, they’ve been referring clients to ADP’s TotalSource human capital management services for a few years now, through their use of ADP’s Accountant Center portal. A dedicated ADP service representative works with KLR through the referral process and then with clients using the service.
“Why it works so well is, whenever we have an issue with any client, we pick up the phone and call one person, and he takes care of it,” said Silva.
Advantages: While “you can’t find [that dedicated customer service] at any other payroll company,” according to Silva, “the key, to me, is the portal.” In addition to facilitating the referral process, the portal “provides a tremendous amount of resources at our fingertips” including non-payroll-related services like webinars providing CPE and “real topical” information on the Affordable Care Act and compliance and reporting requirements.
Challenges: Any concerns KLR has with ADP are typical of referral relationships, according to Silva. They also vary by client, with ADP providing options tailored to their specific needs.
Next steps: KLR plans to “continue doing what we’re doing” while also expanding their client base and ADP offerings.
In their corner
Firm: Bullock & Associates PC
Users: A portion of their clientele, representing a small percentage of Bullock’s growth revenue
Commencement date: Before 2006
On record: Principal Lisa Baker
Process: Tax, accounting and business consulting firm Bullock advises on payroll as a value-added service, recommending Paychex as an outsourced solution for clients. In many cases, the firm will advise small-business clients that are about to open a business on payroll procedures. “Some want to do it on their own, and we discourage that,” Baker explained. Instead, the firm gets those clients in touch with their Paychex representative.
Advantages: Once clients are set up on Paychex, Bullock is confident in the payroll, human resources and benefits services the company provides. “When payroll is done correctly, there are no issues later,” Baker said. “The other key thing is there is so much complexity with employees, the Affordable Care Act, benefits, retirement—[with Paychex] it’s all in one place.”
Paychex’s outsourced solution also operates as an educational tool, providing information that’s outside Bullock’s scope. “As issues get more complex, especially with emerging laws, we really suggest they go to someone who knows what they’re doing,” explained Baker. “With the Affordable Care Act, we don’t want to focus on that; it’s not our core business. But we want them to have someone in their corner.”
Challenges: Any issues have arisen from clients being assigned a Paychex representative they didn’t find to be a great fit. On those rare occasions, the firm has found another rep to work with the client.
Next steps: Bullock will continue recommending Paychex, counting on the payroll provider to continue offering expertise on changing legislation and working with them to answer client questions.
‘It’s really easy’
Firm: Prominent Payroll
Users: 250 clients
Product: AccountantsWorld Payroll Relief
Commencement date: 2010
On record: Director of business development Joshua Jones
Process: Payroll provider Prominent Payroll, which shares ownership with CPA firm BeanCounters Tax & Accounting Services, has been advising clients on Payroll Relief since it opened its one-stop shop in 2010.
“It’s really easy,” shared Jones, who also serves as president of BeanCounters. “We get clients’ EIN numbers and bank information, there’s a form the client has to sign, and they get sent over to Payroll Relief. Within a week, everything is up and running.”
Advantages: The bank integration is the “selling point for us,” Jones explained. “We don’t want to go through the process of the banking side of things,” including bank fees and other administrative concerns.
Jones said the majority of his clients are transitioning from enterprise-level solutions. His clients range from small businesses of one to two employees up to companies of 500, though Prominent Payroll is “seeing a large push on the larger size.” But even with large customers, Payroll Relief still operates as a back office, while Prominent Payroll is client-facing and service-driven.
In terms of functionality, Jones appreciates Payroll Relief’s ability to handle multiple locations and the different accounts attached to those locations. The solution also boasts hundreds of different pay categories.
Challenges: Any problems Jones has with Payroll Relief are addressed by AccountantsWorld. When, for example, a 401(k) match wasn’t calculating correctly, the company added a new field to determine the correct start date.
Next steps: Prominent Payroll will keep expanding its client base, which it typically does through referrals — via client recommendations, BeanCounters’ cross-selling, and the referrals of local agents selling workers’ compensation. Payroll Relief’s flexibility means Prominent Payroll is not “cutting out local agents like the national competitors would,” according to Jones.
Heroes and czars
Firm: Sharp Payroll
Users: 170 clients
Product: Apex Employer OnDemand and Apex Employer On the Go
Commencement date: 2011
On record: President Joe Sharpe
Process: Sharp Payroll was spun off as a division of the family-owned accounting firm Total Income Tax four years ago, and while it benefits from that co-location and access to tax clients, Sharpe still made a big marketing push to grow from a dozen clients to 170.
Sharp Payroll, with a staff of four people, has a “payroll wizard” who sets clients up on Apex, either hands-on or through screen-sharing, where he will file their returns. Each account is then assigned one of two “payroll heroes” that input clients’ key information. Sharpe serves as the “payroll czar.”
Clients will use either Employer OnDemand or Employer On the Go, slightly different platforms that still share the same data with views clients can be switched between. Employer On the Go is more intuitive and smartphone-optimized, while OnDemand offers more complexity for larger clients.
Advantages: Sharpe especially likes Apex’s ability to integrate with third-party providers of benefits, time-keeping or tax software, sharing critical data important to both employers and employees. Both parties can view that information on a sleek interface.
“Lately, the look and feel of the product really jumps out to the end user — and not even just the end user, the employers and at the employee level, improving the level of interaction between employee and employer.”
“We use it in our office a lot and I love it. It shows benefit statements, the taxes the company has paid, other benefits — it’s shown in a graphical manner that’s very easy for employees to see,” Sharpe said. “And you can upload pictures and documents in the system. It’s a good way for HR managers to assign tasks to employees or send documents, with a message like, ‘Please sign this new confidentiality agreement.’”
Challenges: While Sharp Payroll had minor complaints in the past, “The product that came out in the last 12 months answered any challenges we had on the sales end,” reported Sharpe. Electronic time-off requests, for example, were one big client need that Apex has since added to the platform.
Next steps: Sharpe is following the ACA closely to determine what that will require of his practice: “We have the groundwork laid and the software we need, but no one has any experience in it yet; no one’s filed any returns yet related to the Affordable Care Act. That will be the challenge for us in the last quarter of the year moving into 2016.”