"

Estimated reading time: 7 minutes, 32 seconds

Searching for the Secret of Payroll Success

Payroll preparation is one of those subjects that can produce a wide range of opinions among accounting professionals. Postulate that the service can be a good way for accountants to make money or it's not a business they should be in and you can probably get a significant number of practitioners lined up behind either position. Is the main element needed for success the right staff, software or the number of clients?

 CPA Scott Wachtel answers with a definite none-of-the-above choice. Accountants can profit from payroll and they can profit from relatively few clients these days, says the partner in Denver, Colo.-based Wachtel and Associates.

"It is pretty easy," says Wachtel. "It takes process. Payroll is nothing more than process." The right process makes all the difference in how difficult handling the demands of clients can be. Wachtel, who started offering payroll services in 2008, says, "I worked harder when I had only 10 clients than when I have 80."

Wachtel's firm does some payroll in house, although relatively few clients fall into that category because of the liability involved. Most are processed through client portals.

The secret to process, he notes, is to have standardized processes. Sticking to that principal sustains profits. Not sticking to it would cut into the bottom line so Wachtel describes his approach a static process. He tells clients, "You will submit payroll this day and you will get paid that day."

And as to the reward? "We are probably only making cost and about $25 a month per client. It's not a lot," he says. "On the other, that's profit, I am working four hours three days a month on that."

The profit translates in $166 per hour, not as good as tax preparation; better than accounting. But the benefit of payroll preparation goes beyond that.

"Payroll is a very good gateway to other services," he says. Wachtel finds that when he can get clients to sign up for payroll "We drive them to drop their current tax preparation services."

In or Out of Payroll?
Are more accountants moving into the payroll business? There do not appear to be statistics that can easily answer that question.

"We haven't done a quantitative study on that. My general perspective is that there is a bit of a gravitation towards payroll," says Ralph Matlack, group product manager for Intuit Online Payroll and QuickBooks Online Payroll, which include separate offerings for accountants. However, he continues, "We think payroll can be a strong part of the solution the accountant brings."

For many vendors, the line of payroll products boils down to "Have it your way" ranging from in-house preparation through processing delivered by firms all the way up to traditional outsourced service bureau processing.

Since everyone has to do the same things - calculate pay and deductions, print checks, pay payroll taxes, prepare reports - your way boils down who does each of these tasks and whether it takes place inhouse at the company, in the accountants office or at the payroll provider's place of business.

Many payroll providers offer accountants the chance to refer their clients to utilize the vendors' services and also give the accountant the chance to markup the product and resell services to their clients.

When practitioners off-load the back office work, they can offer payroll profitably while serving very few clients, says Michael Alter, president of SurePayroll. "You can have two or three clients and make money on," Alter says. "It's very affordable because you don't have any additional fixed costs."

Owned by service bureau Paychex, SurePayroll markets Internet-based service to small businesses directly and through accounting firms. Accountants can enlist as referrals or they can serve as resellers with the company providing a white-label product that practitioners can brand with their logos, color schemes and business names.

"You can change the look and feel of the application," says Alter. "It's a true private-label environment."

Showing the Money
Thomson Reuters has chosen to offer payroll through two different brands. One of these is MyPaySolutions. Still relatively small, the unit's revenue had 24-percent growth in 2012-13 with a run rate of about $6.5 million for the online payroll services.

The pitch for MyPaySolutions is that accountants should offload the payroll business so they can spend time on other efforts in the market. "We Do Your Payroll. You Run Your Business" is the phrase the company uses on its website and it's a phrase that almost any service bureau could use.

For the moment, that effort is running independently of the payroll service offered through Thomson Reuters' Accounting CS Payroll, a least when it comes to the market message. But that is going to change, says Scott Fleszar, VP of strategic marketing at the company's Tax & Accounting business.

"Next year, we are going to have more unified message," says Fleszar. The company will be delivering the message that Thomson has the services that can allow accountants to do payroll "Any way you want to do it," he says.

Thomson is emphasizing the versatility of its offerings and Fleszar says that approach is necessary because firms often do not provide the same services to all clients. "Some firms will process payroll in house for their key clients," he says. And they will tend to hand off the rest of the clients to a processor such as MyPay Solutions.

SurePayroll gives accountants a $100 gift card for every referred client that opts to use the company's payroll services. MyPaySolutions provides a more direct reward through revenue sharing and the company says it has preferred more than $400,000 in revenue sharing to firms over the last year.

Signing up for the SurePayroll reseller program is simple, taking about five minutes for an accountant to create an enrollment form. As with other wholesale offerings, the processing services offered at a discount from list prices with reselling firms able to mark up the cost as they so choose.

Intuit is in the market with a range of services, including payroll offerings that identify with QuickBooks and those that do not. And there has been some significant activity as the company has worked to polish its Internet-based product line, particularly offering a speedier QuickBooks Online that has as much appeal to users as its desktop versions of the pervasive accounting software.

Matlack says with the rewritten QuickBooks Online, his company worked to tighten the integration between the accounting product and its embedded payroll capabilities.

"It wasn't just a fresh coat of paint," Matlack says in describing the approach to renovating the cloud-based product. "There were some structural things done with both the underlying technology and to the design of the user experience. The aim was greater ease of use and more speed."

The product was more logically laid out so that information about payroll and sales taxes were placed close together, for example. And in general, the goal was to give the user the ability to operate the system with fewer clicks throughout the product.

The Accountant versions of Intuit Online Payroll and QuickBooks Payroll give practitioners a wholesale version the can markup. Intuit also offers Intuit Full-Service Payroll, a typical outsourced payroll service bureau. Recently, Intuit began a referral program of the full-service bureau.

The Healthcare Factor
BenefitMall is emphasizing the resources that it can provide to accountants and that's particularly true in terms of those resources available for dealing with the Affordable Care Act.
"Our differentiator is the resources that we can bring to our CPA trusted advisors to the healthcare reform side," says Cathy Palmer, SVP of business development.

In many cases, accountants doing payroll find they don't want to grapple with healthcare. "What they are realizing, if they are in the payroll business, is they don't know how to handle healthcare reform," she says.

BenefitMall, which markets the CompuPay line, has a typical array of payroll services. CompuPay Payroll Online provides companies with cloud-based service bureau processing capabilities.

It also offers CompuPay Phone/Fax Payroll for those businesses that prefer a traditional way of getting their payroll information into the hands of the service bureau with the company providing specialists to handles customers. For companies that want to do their payroll in-house, BenefitMall offers CompuPay PayLoad for server-based processing.

Companies can also choose to enter payroll data via their PCs, but ship the information electronically to BenefitMall for processing. Business owners and managers can prepare their own reports and print checks in office.

The BenefitMall programs for CPAs and accountants spread across an equally wide range. The company offers a referral program and also enables practitioners to manage client payroll in-house while letting BenefitMall service as the processor via online payroll of PC Software.

Palmer says there has been growth in the reselling program and notes that CompuPay, then an independent company, first introduced a co-branding offering 13 years ago.

The company is also willing to purchase payroll practices from firms, although Palmer says it is not aggressive in this area. However, the arrival of ACA brought a flurry of interest from firms wanting to sell. As the act was delays, that demand decreased

Read 7402 times
Rate this item
(0 votes)

Visit other PMG Sites:

Template Settings

Color

For each color, the params below will give default values
Tomato Green Blue Cyan Dark_Red Dark_Blue

Body

Background Color
Text Color

Header

Background Color

Footer

Select menu
Google Font
Body Font-size
Body Font-family
Direction
PMG360 is committed to protecting the privacy of the personal data we collect from our subscribers/agents/customers/exhibitors and sponsors. On May 25th, the European's GDPR policy will be enforced. Nothing is changing about your current settings or how your information is processed, however, we have made a few changes. We have updated our Privacy Policy and Cookie Policy to make it easier for you to understand what information we collect, how and why we collect it.