CPA Practice Advisor - 16

ADVERTORIAL

Cloud
Computing
2020

How to make payroll part of
your practice
By Katelyn Sullivan, CPA

Now that the October extension deadline has
passed, tax season is finally over. After you take
a minute to congratulate yourself for making
it through, it will be a natural time to reflect
on how you can improve your practice and
deliver more value to clients next year. For many
accountants, that may mean looking at adding
services like payroll to your roster.
After all, business owners who do payroll
themselves spend an average of 18 hours
a month paying employees and filing
employment taxes. Given the taxes involved,
it shouldn't be surprising that 38% of them
expect their accountant to handle their payroll,
according to our 2019 Small Business Finance
and HR Survey.
If you're thinking about adding or expanding
your payroll practice, here's what you need to
know.

Why add a payroll service?

When a business decides to hire an accountant,
they say the top benefits are having more time
to focus on their business, saving money, and
reducing stress. By offering payroll services, you
can meet all three of these needs.
Adding payroll is a natural extension to your
existing services. It also provides the opportunity
to have consistent check-ins with clients and get
better visibility into key aspects of their finances
(like cash flow and expenses). You'll be able
to play a more strategic role, and there will be
fewer surprises next tax season - for everyone.

Three models for providing payroll services

KATELYN SULLIVAN
Partner Development Leader

Katelyn Sullivan, CPA, leads the Partner
Development team at OnPay, which
received a five-star review from CPA
Practice Advisor and Editors' Choice
from PCMag. Prior to joining OnPay,
Katelyn spent seven years with Ernst
& Young focusing on technology
adoption and process improvements
for business clients. She can be
reached at partners@onpay.com.

OCTOBER 2020 ■

Depending on how much effort you want to
dedicate, there are three approaches to how
your firm can add payroll:

Run payroll for clients: You manage payroll
for the client, including entering data and
processing individual pay runs. While it does
require a higher level of responsibility on your
part, you'll have the most insight into your
clients' business and cash flow, and it has the
greatest potential for revenue.
Monitor clients' payroll: Clients are the ones
responsible for managing and running payroll,
but you'll still be able to review pay runs and
import expenses into the GL. This approach
gives you a high level of transparency and client
contact, but there's not as much work to do (or
bill for).

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Refer clients to a provider: If you vet payroll
providers for clients, you can help them make a
great choice and steer them toward a solution
that works well for you. You'll save time (and
tax notices) by cutting down on mistakes, but
you won't have as much visibility into clients'
finances. And there's still some potential for
earning commissions.
However you choose to approach it, choosing
a payroll system that syncs with your preferred
accounting software will limit errors and
make bookkeeping easier. The best payroll
software will easily integrate with platforms like
QuickBooks or Xero by mapping payroll-related
expenses directly to the right accounts in the
general ledger.

Building a stronger relationship

In our research, small business owners told us
that accountants are the advisor that they trust
most for advice relating to their business - more
than their lawyer, banker, or personal network.
Nonetheless, 23% of them also said it was
likely they would switch accountants within the
next year. Studies have shown that the cost of
obtaining a new client is at least five times more
than the cost of retaining an existing client, so it
makes sense to maintain and build upon longlasting relationships with clients you already
have. Our data also shows that clients who are
more satisfied with the range of services you
provide are more likely to remain with you for
the long haul.
Offering payroll services to your clients is a winwin: You'll free them up to focus on running their
business while simplifying bookkeeping, reducing
errors, and opening a new revenue stream for
your firm. While every client has different needs
and expectations from you, it's worth asking how
they're running payroll now and whether it's
something you can take off their hands.

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CPA Practice Advisor

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