4 Tips to Adding a Payroll Partner
(While Protecting Your Back-end)
As accounting firms look for new ways to get clients, keep clients and generate additional revenue, more firms are getting involved in payroll in some way, shape or form.
Advances in technology, particularly in the amount of software and web-hosted payroll service options available to accountants, make it easier for firms to offer payroll. But it's a "buyer beware" world, and some firms are learning the hard way that not all that glitters is gold.
What they're finding is that by choosing an attractively-priced software or reminder-style web-hosted payroll service option to offer their clients on the front-end, they are creating more constant – their workload on the back-end remains constant-there isn't any. And as more of their clients use the firm's payroll service, the amount of back-end work increases, cutting into margins and taking staff time away from higher revenue generating activities.
But not all firms dipping their toe into the payroll waters are experiencing this problem. Some are choosing to use full-service solutions that take care of their clients' tax deposits and filings. Firms choosing this route may not generate as much payroll profit on a per-client basis, but as they add more clients, their workload on the back-end remains constant-there isn't any. That means the firm controls their payroll growth instead of letting their payroll growth control them. In the long run, that's key to making offering payroll profitable and valuable, not just for clients, but for the firm as well.
Look before you leap
It's easy to get caught up in trying to keep up with the Joneses. They're two doors down from you and just started offering payroll to their clients. Now you feel you should do the same to be competitive. But what should you do before adding payroll to your suite of services?
- Pick a client niche you can easily service.
Taking on clients with payrolls that have allocated tips, multiple pay rates for individual employees, job costing, certified payroll requirements, union reporting requirements, etc. can have a big impact on how much involvement you have in processing payroll. Analyze your client base and determine what segment presents the best opportunity for your firm to have minimal involvement in the actual payroll process.
- Decide how much back-end payroll tax work you want to do.
Calculating payroll taxes and filling in payroll returns accurately is one thing. Getting deposits and filings in on time and taking liability for that is another. If you think performing those tasks is not the best use of staff time, then you should choose a solution that will handle the back-end tax work for you and your clients. You will probably give up a bit of your margin if you go that route, but you're buying back time that your staff can use to provide higher value services to your clients, and ensuring that as your payroll client base grows, your back-end workload remains the same while your payroll profit increases.
- Choose how you want to handle the front-end processing.
If you go with a software option, you have one choice - it will be up to you to collect the information from the client and plug it into the software. You'll then need to get employee check information back to the client so they can print checks, or you'll have to print the checks and stubs and get them to the client. If you select a web-hosted solution, you'll have more flexibility as most allow clients or their accountants to submit payroll information on the web.
- Figure out a fair price point.
If you want to maximize margins and still provide a good value to your clients, you need to know what your competition charges for the same type of service you offer. If you don't, you may end up charging too much for the same service your clients can get at a lower price from another accountant or service bureau. On the flip side, you may end up not making as much as you could if you don't do your homework. If you're in it to make profit, why wouldn't you charge at, or a little below, what your competitors charge for the same service? If you're partnering with a service bureau, they'll leave room for you to get your fair share by offering you discounted pricing or a flat fee per client. Price your service above what they charge you but below what they charge their normal customer and there's your margin!
Remember, adding payroll to your menu is not a decision to be taken lightly. If you decide to do it, selecting a partner that's a fit for your firm's goals is critical and demands that you do your due diligence. There are many options available and you must have very strict set of requirements that you expect your eventual partner to meet. During the decision-making process, don't waver from them just because you might be able to make a little more money by sacrificing a requirement or two. In the long run, you may end up sacrificing more than your requirements if you do.
About SurePayroll:
Voted Editor's Choice for best payroll service by PC Magazine and a Top 100 Product by Accounting Today, SurePayroll is America's largest full-service online payroll service and honoree of the of the Inc. 500 Fastest Growing Businesses award two years in a row. In addition to its payroll and ClickFREE™ tax file and pay service – which allows a user to complete the entire payroll process in minutes – SurePayroll provides HR and compliance resources, workers' compensation products and 401(k) retirement solutions designed specifically for small businesses.
SurePayroll also offers a private-label and co-branded payroll service to accounting and banking partners to offer payroll processing to their small business clients.
SurePayroll is passionate about small businesses and their payroll. The company is dedicated to providing an extremely friendly and simple payroll experience – at a price small business owners can afford. For more information, visit www.surepayroll.com.
