Depending on their point of view, payroll is either the best thing to happen to a CPA firm or the bane of their existence. But no matter what side of the fence CPAs are on, they have plenty of options to use or refer a payroll service.
Whether it's a fully outsourced payroll service like ADP or Paychex, or an online service to be used by accountants or small business such as Intuit Online Payroll, CompuPay or SurePayroll, chances are that CPAs have used or considered working with one at some point.
Those firms that have embraced working with a payroll vendor have found an additional revenue stream or, at the least, a low-cost service offering allowing firms to further their trusted advisor role. And for the firms that may not have considered a payroll service, Michael Cerami, vice president of corporate alliances at CPA2Biz - the marketing and services portal of the American Institute of CPAs - opined that it's "a good time to take a temperature check on the payroll market."
CPA2Biz has been a marketing force behind Rochester, N.Y.-based payroll and HR service provider Paychex, which has been a member of its Trusted Business Solutions Advisor program since 2003.
"Everything I hear suggests that more firms are exploring payroll, have added payroll services or are getting in the business of offering payroll. If clients can work through their trusted advisor, it will take some pain away," said Cerami. "Newer companies coming into the space have capabilities that allow firms to deliver payroll service easier than five to 10 years ago. In the same light, firms want a relationship with the payroll vendors because they don't see it as a profitable service to add, so they will recommend."
HYBRID MODEL
Cerami noted that there is also a "hybrid model" emerging where the larger outsource vendors, like an ADP or Paychex, can offer their platform to firms and firms can in turn offer the service. In effect, it looks like the firm is managing the payroll but it is the vendors that handle the processing. Firms can then focus on servicing their clients and managing the relationship.
In many cases, it's the smaller accounting firm that benefits the most from using a payroll service, since it is yet another value-added offering they can monetize to the small-to-midsized businesses they serve, who can't always afford to outsource to a major payroll vendor.
Mount Prospect, Ill.-based New Vision CPA Group (formerly Matousek Consulting) - a six-person firm - is one of many practices that utilize payroll services as a revenue stream. They have a relationship with the vendor whereby they pay for the service and then in turn charge clients.
For New Vision, payroll was a starting point for their business, according to managing shareholder Jody Padar. She claims - as many CPAs still do - that she hated payroll when she first started in public accounting, mostly because there was no efficient, affordable software to do it. She was then introduced to PayCycle, which was rebranded as Intuit Online Payroll when QuickBooks parent Intuit Inc. purchased it last year.
"My clients are in the $1 million-to-$10 million market and many need payroll services," explained Padar. "You can refer them to ADP and they'll want a lot of money, or they are going to come to you [the CPA]. If you don't have the right software it's going to be very hard. Intuit Online Payroll allows me to make a lot of money without a lot of labor."
Padar claims that she can charge one client $250 a month to do their payroll, while it costs her roughly $20 a month to provide the service. She claims that the same client was, at one point, paying up to $400 a month for payroll services. "All these CPAs who don't want to do payroll are leaving money on the table," she said. "I think some CPAs just don't get where the software is today. It's really allowed me to turn someone who would be non-billable into billable."
Duluth, Ga.-based CPA Ahmed Zaki also owns his own practice, and services clients of approximately the same size as Padar's firm. For him, offering to do a client's payroll is also a revenue stream.
Zaki had at one time used ADP and Paychex to handle payroll processing for his clients, but later found that while they did a good job, "for the cost and convenience," AccountantsWorld's Payroll Relief was the better solution. Zaki has utilized Payroll Relief for the past three years, because they had "better integration with other financial software and reasonable prices."
"With Payroll Relief, we can use the Internet for preparing live payroll, and handling employee direct deposits, payment of taxes, and preparation of quarterly and year-end payroll tax returns is becoming much easier to handle," said Zaki.
REFERRING AND RECOMMENDING
Others have opted to not work with payroll vendors as a direct source of revenue, but accept the minimal revenue offered in exchange for the long-term results of simply being able to recommend a reliable payroll service to their clients.
Robin Brissenden is a CPA and owner of the six-person, Fountain Valley, Calif., firm of Santo & Dees. He claims that, during his tenure, he has utilized "nearly every payroll service out there" before going with CompuPay. He recalled that when he started the firm eight years ago, most small firms would get clients and do their payroll because it was a direct revenue stream, but anytime there was an adjustment to be made - such as overtime pay - it became difficult.
"CPAs can't do [payroll] as cheaply or efficiently as a payroll company, and you cheat your client by charging them too much. I'd rather refer clients over to a payroll company," said Brissenden. "You cannot charge enough to make payroll viable [as a revenue stream], so I refer clients to CompuPay. Payroll is part a network of services that I provide and [CompuPay] recommends me. [If] they have a client who needs a good CPA in the area, I am top of mind. That's more valuable to me than any thing I can charge for."
