For decades, most accounting and bookkeeping firms have taken a stanch “I don’t do payroll” stance. And with good reason. Payroll can be time-consuming, error-prone, and at the whim of constant legislative changes—all of which eat away at any potential profits for busy firms. In short, payroll has never really been the “money maker” for accountants or bookkeepers. In fact, payroll has always been more of a headache than anything.
However, the advent of payroll software for small business has caused more than a few firms to reconsider their stance. Not only have these platforms made payroll infinitely faster, but the amount of time saved has also made payroll more profitable. Indeed, accountants and bookkeepers who have begun to offer payroll software for small business are starting to reap the rewards.
Of course, simply adding payroll services to your practice doesn’t guarantee extra money in your pocket. In order to profit from payroll software for small business, you’ve got to know how to make the software work for you.
As mentioned above, payroll has long been viewed as a “loss leader” that no accountant or bookkeeper wants to touch. While this sentiment was understandable for quite some time, recent advances in accounting technology are forcing us to think about payroll differently.
Over the past decade, cloud-based software has allowed accountants and bookkeepers to break away from their desktop programs and begin storing information on remote servers. While this may seem like a small shift, the advent of this technology paved the way for cloud payroll software.
Cloud payroll software for small business has completely changed how payroll is processed. The new technology processes calculations automatically, recognizes legislative changes, and processes payments and remittances—all on its own.
In other words, payroll platforms have made running payroll faster, easier, and less risky than in the past. This has leveled the playing field and allowed firms of varying sizes to provide the same quality of service for clients.
While there’s no doubt that payroll software for small business has made running payroll faster and more efficient, not all of these software services are the same. In order to make payroll a profitable part of your firm, you need to choose a payroll software that is actually designed for accountants and bookkeepers.
Payroll software that is designed for accountants and bookkeepers is very different than a software designed exclusively for end users. For instance, accountant-centric payroll systems often offer the following benefits:
● Administrator Dashboard: Having a one administrator login and one dashboard, which makes it easier for an accountant or bookkeeper to manage multiple clients in one place.
● Client Portals: Clients can have their own portal to access documents such as paystubs, ROEs, T4s, etc..
● Control vs Flexibility: An accountant-centric system allows accountants and bookkeepers to toggle administrative settings so that they can run payroll themselves or let the client take control when needed.
● Collaborative Software: Accountants and bookkeepers can collaborate and share data with clients on the same platform.
● Value-Added Services: Extra features such as records of employment, holiday pay calculations, e-signing features, secure document vaults, and more allow accountants and bookkeepers to offer their clients a more comprehensive service.
The benefits of an accountant-centric payroll software such as Knit, not only make it easier for accountants and bookkeepers to handle their client’s payroll, but it also provide a better experience for the client as well.
Along with making payroll much easier to run, the advent of cloud technology has also meant that software costs have also dropped dramatically. As a result, it’s far more affordable for firms to can get up and running with payroll software for small business without a big up-front investment.
However, once you choose the right payroll software, you need to know how to actually make it profitable for your firm. Put simply, you need to implement a pricing model that sells the service for more than it costs you to do the work.
To do this, you need to ask some important questions about a client’s payroll needs, including:
● What is their current payroll method? How much work is involved in setting them up with a new payroll software for small business? Does their current system integrate with your payroll software?
● Do they want you to run payroll entirely for them or do they want to do some aspects themselves?
● How many employees do they have?
● What are the pay frequencies?
● Are they running payroll in one province or in multiple different provinces?
● Do they need direct deposit?
● Do they need WSIB remittance reporting?
● Will you need to process third-party payments such as payments to RRSP management companies?
● Are they looking for any extra services such as time-tracking or performance management?
While this is not an exhaustive list, asking these kinds of questions will help you determine how much can be automated with payroll software and how much work will be required on your part.
For instance, running payroll for a company with 50 employees that are all paid weekly will be a lot more work for you than a company with 15 employees paid semi-monthly. As a result, your pricing should change based on the company’s needs to ensure that you’re making a reasonable profit.
While establishing the right pricing model can help make payroll profitable up front, you can also reap the financial rewards of offering payroll services over time. These long-term gains include:
● Becoming a one-stop-shop with a total financial package means you can retain long-term clients and improve year-long cash flow.
● The more of your client’s work you manage, the stronger the relationship and the lower the risk of churn.
● Offering payroll opens the door to up-sell clients on other services.
● You can attract new clients looking for an all-in-one solution.
You’ve got the right payroll software and you’ve set your prices, but you can’t actually reap the rewards of selling payroll unless clients are actually buying it.
If your clients are already using a dedicated payroll company, you have a chance to take a slice of that pie. Since you already have an ‘in’ with your clients as their trusted accounting partner, you simply need to sell them on the benefits of running payroll with your firm. Some of these benefits can include:
● Clients often see payroll as complex and cumbersome, so you can take their burden off their plate, giving them more time to focus on their business.
● Less data entry for the client since you already have access to most of their financial information.
● Having an expert running payroll like an accountant or bookkeeper means fewer errors and mistakes.
● Clients can go on vacation or be out of the office and not need to worry about pay runs.
● Clients don’t need to deal with technical issues or learning the intricacies of the software.
● The client will have one less supplier to manage if they bundle their payroll with their accountant or bookkeeping services. In other words, you can be their one-stop shop for back-office admin.
● Finally, you’re offering your client peace of mind that their payroll is in the hands of an experienced accounting professional.
Keep in mind that offering payroll also makes your firm enticing to new clients. Update your website to include payroll services, what software you use, and the benefits of running payroll with your firm. For example, BDO has done a great job outlining why you should run payroll with their firm and exactly what services you’d be getting as a client. You can also bolster this with testimonials from clients who have begun running payroll with you.
While you may still be skeptical about offering payroll services, keep in mind that may of your competitors are probably already offering these kinds of services. In order to compete and to keep up with changing client expectations, it may be time to rethink payroll as a "loss leader" and instead see it as the "money maker" that it can be.