After accounting and bookkeeping, payroll is the service small business owners want most from their accountant — more than one in three put it at the top of their services wish list. This isn’t much of a surprise since they also told us their businesses spend an average of 18 hours every month on payroll, but they still feel uncertain about whether they’re getting things right. Specifically:
- 25% don’t feel confident they are deducting and submitting taxes correctly
- 43% aren’t sure they’re correctly categorizing contractors and employees
- 57% don’t think they’re doing a good job getting their people paid on time
And that uncertainty is understandable: another 28% of them have received a notice from the IRS or have been audited.
As they look for solutions, it makes sense for them — and you — to have one trusted partner take care of accounting, bookkeeping, and payroll. And since they already trust you more than any other advisor, it’s a great opportunity to build your relationship and add some revenue to your bottom line.
Here’s a quick look at how adding payroll services can work for different practices.
Why offer payroll services?
It’s a natural extension to your current services and expertise to offer payroll. Plus, the more you’re involved with a company, the better you’ll know it, giving you more insight into their operations. With a finger on the payroll pulse, you’re better able to spot risks before they come up, keep on top of cash flow, or even advise on what salary to offer that next new hire.
Models for offering payroll services
Whether you want to help clients choose a provider or dive all the way in and manage payroll on their behalf, here are three approaches to making payroll part of your practice:
|Model||How it works||Pros||Cons|
|Refer||• Refer your clients to a payroll service provider you recommend, but let your clients manage payroll themselves||• Reliable payroll calculations and filings so clients avoid notices, fines, penalties
• Be seen as a knowledgeable advisor offering helpful advice
• Payroll data seamlessly syncs to the GL
|• Less revenue
• You likely won’t have the visibility to anticipate problems or answer questions
|Monitor||• Monitor their payroll, but stay hands off
• You own the books, but payroll is managed by the business owner
• You can review each pay run or just map payroll data into the GL
|• Keep an eye on cash flow
• Make sure the GL is right without getting involved in the day-to-day management
• The client maintains responsibility for making sure payroll is approved
• Increased revenue opportunity
|• Clients still control the process and can make mistakes|
|Run||• You run payroll with full ownership of the process
• Give the business owner or management permission to run payroll, but everything passes through you
• Options to hire on staff or choose a payroll service provider as your partner
|• Most insight into your client’s business
• Highest visibility into cash flow and business operations
• Highest potential revenue for your practice
|• Higher responsibility and risk|
How do you choose?
Start with a conversation. Ask two or three clients how they’re currently handling payroll and if they’d like some help. Providing high-quality payroll can also go a long way to strengthening your reputation with them and opens the door to providing additional services.
Once you have a sense of what your clients expect, you can start thinking about how you want to deliver it to them. Do you want to hire people to build an in-house payroll team? Or does it make sense to refer clients and take a commission? Or could you fold payroll into a monthly fee you charge clients to allow you to move away from a top-heavy billing cycle that can cause you uncertainty and cash flow problems?
By weighing what your clients want against the needs and capabilities of your firm, the right approach should reveal itself pretty quickly. Doing client research might even help pre-sell some clients on payroll services.
Getting started with payroll — and more
In our survey of small businesses, OnPay learned that accountants are the advisor that owners and managers trust most for advice relating to their business — even more than lawyers, friends, and family — so expanding your services is a great opportunity to build on that confidence.
Getting started with payroll services has never been easier. OnPay easily integrates with QuickBooks or Xero. We offer the flexibility to share payroll data how you want to see it — and we make timely, accurate, and up-to-date tax calculations, payments, and filings a priority.
However you choose to approach it, adding payroll to your services can be a big win for both you and your clients. Your clients get hours back that can be focused on growing their business, and you have the opportunity to expand your practice.