CPAs Leverage Opportunities As Payroll, HR Solutions Providers,
Experts reveal more proven strategies for cementing long-term relationships with your clients.
September 24, 2007
by Hank Berkowitz
Additional comments from this roundtable discussion can be found in your September 2007 issue of Journal of Accountancy.
To help CPAs deconstruct the benefits of managing payroll and human resource administration functions for their clients, we invited top thought influencers and solutions providers from the marketplace to share their insights on the opportunities, considerations and caveats facing CPAs who are considering this fast-growing practice-building niche. In last week’s column, our expert panelists disclosed key factors that CPAs should consider before selecting a Payroll & HR Solutions partner. They also revealed how today’s “macro-technology” trends — mobile computing, security, paperless office and ASP models and the like — affect enhancements of payroll and HR solutions.
Joining us (listed alphabetically) are: Michael Alter, president of SurePayroll, Inc.; Jon Baron, president of Professional Software & Services, Thomson Tax & Accounting; Dr. Chandra Bhansali, president & co-founder of AccountantsWorld, LLC; Jim Heeger, CEO of PayCycle, Inc.; Don McLoughlin, vice president of Marketing, ADP Small Business Services; Vincent Mottola, senior vice president, Ceridian Small Business; and Walter Turek, senior vice president — sales & marketing, Paychex, Inc.
Gentlemen, payroll taxes and payroll tax penalties are increasingly topping the list of concerns for our readers. How is your company addressing these concerns and fostering a comfort level for CPAs?
MICHAEL ALTER (SurePayroll): The same way we always have — by making all payroll tax deposits and filing all payroll tax returns for our clients. As long as the client gets their payroll in on time and has the required funds to pay the payroll taxes in their bank account when we need it, we’re responsible for the timeliness and accuracy of their deposits and filings — period. If there’s a notice, we’re on the hook and we’ll deal with the IRS or state taxing agency directly. There’s a big difference between reminder services and services that fully manage payroll taxes. When it comes to payroll taxes and returns, our clients and their accountants prefer we do it all for them. So we do.
CHANDRA BHANSALI (AccountantsWorld): First, AccountantsWorld has taken numerous important steps to minimize the risk of penalties. Detailed instructions are provided to clients regarding availability of funds. Our Payroll Management Center lets accountants view upcoming tax payments. We automatically make payments in a timely manner. If a client has an NSF for tax payments, we call accountants proactively, advising them to have their clients transfer the funds. And finally, if a penalty is assessed due to our error, we pay it.
JIM HEEGER (PayCycle): PayCycle guarantees that our tax calculations will be accurate or we will pay any penalties. In addition, since our payroll system is online, a CPA does not need to maintain tax tables. We do that on our side. PayCycle also includes a customized “To Do” list and automated e-mail reminders to run payroll, pay taxes and file forms so deadlines are never missed.
DON MCLOUGHLIN (ADP): ADP’s tax filing service processes payroll-related taxes for federal, state and local agencies. Based on a client’s authorization, ADP will calculate, deposit and reconcile clients’ federal, state, local, Social Security, Medicare and SUI (State Unemployment Insurance) payroll taxes. In addition, ADP will prepare and submit all returns and reconcile reports as required by the government agencies. If a government tax agency inquires about a filing, ADP will respond
VINCENT MOTTOLA (Ceridian): Ceridian guarantees the accuracy and timeliness of employment tax filings and payroll calculations, but our commitment goes well beyond that. Small business clients usually lack the specialized positions of payroll and HR professionals and bear a greater cost of compliance than large companies. We’ve instituted training programs toward certifying our service representatives in FPC (Fundamental Payroll Certification) and CPP (Certified Payroll Professional) credentials conveyed by the American Payroll Association. They can identify potential problems and alert the client and if need be, their accountant, before any damage is done. Ceridian also offers a full suite of HR compliance resources addressing a wide range of employment law issues such as wage & hour law, FMLA, ADA, harassment and discrimination prevention and ethics.
WALTER TUREK (Paychex): To avoid costly penalties, it’s crucial for businesses to stay on top of payroll taxes. But doing this can be tricky — many penalties are the result of businesses simply not realizing when they needed to file their taxes, or what forms to file. Paychex can help CPAs help their clients manage their payroll taxes and avoid this often costly mistake. Our Taxpay® service calculates, files, and deposits a client’s payroll taxes, while also regularly setting aside funds as the business incurs liabilities. We deduct the funds on payroll check dates, so it’s easier for clients to manage their cash flow. This allows CPAs to rest assured that their clients’ payroll taxes are in good hands, and that they’ll be filed on time.
How does your Payroll & HR Solution help CPAs make more money and solidify client relationships?
Alter: We do it by offering a flexible program for CPAs. If the CPA feels they’d make more money and solidify relationships by not getting involved in clients’ payrolls so they can focus on higher revenue-generating activities that add more value, they can participate in our referral program. The CPA won’t have any involvement in processing payroll, but they will have 24/7 online access to the reports and returns they need to perform other services for the client. The clients will also have access to other SurePayroll services like Sure401k and SureAdvisor HR and compliance resources.
If the CPA feels offering payroll as a service is what will help them make more money and solidify relationships, they can participate in our reselling program. They’ll be able to offer SurePayroll’s affordable, simple and friendly service under their own brand, and generate revenue in the process.
Additionally, CPAs can look to SurePayroll as a one-stop resource to small business issues. We recently launched “The Small Business Minute” — one-minute videos on topics related to small business administration, including common HR topics like new hire reporting, payroll processing, employer taxes and tax forms, Section 125 Plans and 401(k) retirement plans. We also have dozens of how-to guides and articles available to CPAs and their clients.
JON BARON (Thomson Tax & Accounting): Processing the client’s payroll virtually locks in that client for the CPA firm. The paperless and Web-based tools that we offer make it easy for CPAs to offer payroll services to clients in an efficient and profitable way. Or if the firm chooses not to provide payroll services themselves, they can refer their clients to our service bureau payroll operation, myPay Solutions, where the client will receive personalized service and the firm will receive a revenue share and will also receive the client’s payroll data that can be imported directly into their CS accounting software for additional efficiencies.
Bhansali: Ease of use and a high degree of automation are two important attributes of Payroll Relief that help CPAs turn payroll processing into a highly profitable client service. But the most important factor is that the Web-based Payroll Relief lets CPAs and their clients work collaboratively. Clients can have as little or as much involvement as CPAs and their clients want.
Most Payroll Relief users have made payroll processing highly profitable by letting their clients enter data and print checks in-house. Payroll Relief also allows import of payroll data from Excel spreadsheets and CSV files, thus eliminating input of payroll data.
Heeger: Time is money. By offering the most extensive electronic federal and state payment and filing coverage, CPAs just click the mouse to run payroll, pay taxes, and file forms. From our survey of accounting professionals, we learned that CPAs would like some help marketing their payroll services. Therefore, we developed a resources section within our product to help CPAs grow their payroll practices. This section includes customizable brochures and presentations, marketing guides, and discount offers from business services vendors.
Mottola: Ceridian’s partner referral programs allow CPAs to offer a solution that solidifies the client relationship without the costs inherent in managing the solution themselves. Labor costs have increased significantly due to the demand for talent in the accounting community. There is a much better return on those labor costs when the firm spends time on the value-added services their clients demand, especially since small businesses are not willing to pay a lot for payroll services, as they see no bottom-line benefit for those services.
Turek: Because Paychex partners closely with CPAs, we empower them to offer all the services we do in a “one-stop shop” fashion. This means that you don’t have to personally perform payroll, 401(k) recordkeeping, benefits administration, etc., but in conjunction with Paychex, you can offer this service to your clients. We allow you to enjoy the best of both worlds — more services to offer your clients, but without the actual backroom work. This allows CPAs to spend their time with clients doing more valuable and higher revenue-generating tasks.
What size CPA firm (or business enterprise) is in your company’s “sweet spot”? How is your organization ideally positioned to serve companies in that size range?
Alter: We assist small businesses with anywhere from one to 100 employees. CPAs who cater to that business demographic are a perfect fit for us. The size of the CPA firm is not all that relevant. It's more about the clients they work with.
Bhansali: Our targeted market segment for all our solutions, including Payroll Relief, is small to mid-size CPA and accounting firms. Through AccountantsWorld’s online community with over 100,000 members, and our commitment to help accountants advance their practice without ever competing with them, we have created a trusted relationship with this group of CPAs and accountants.
Heeger: PayCycle is built to serve small employers with one to 20 employees. According to the U.S. census, this is 85 percent of all U.S. employers, 5.2 million out of 5.9 million.
Can you share any success stories about CPA firms that have used your payroll/HR solutions offerings to build their practices?
Alter: Yes. For example, an accountant in Chicago resells SurePayroll and has reduced the amount of time he used to spend on payroll-related tasks. He says our partnership has enabled him to focus on other services that generate more revenue for his firm and more value for his clients.
A San Francisco-based accounting pro resells SurePayroll and says she’s enjoyed the level of service we provide because it helps her provide better service to her clients.
And, a Minnesota accountant who resells our service to her clients likes our service so much that she is a SurePayroll customer herself! She likes saving time and avoiding the hassles of having to manage payroll tax fillings.
These are just three examples of many in the accounting community who have partnered with SurePayroll to build their practices. What I like best is they all have different reasons why their partnership with us has been beneficial. It’s really a testament to how flexible our program for accountants is.
Bhansali: Success stories are numerous. Take the example of Rocky Hill, CT, firm of Chokshi, Mund & Raczkowski, PC. Like most CPA firms, they were very skeptical about offering payroll services. Based on their experience processing some clients’ payrolls using a desktop payroll system, they concluded payroll processing is a nuisance. “We kept turning down clients’ requests for payroll services and referred them to payroll service bureaus,” says Jim Raczkowski. “When we learned about Payroll Relief and its capabilities, we were still skeptical but decided to use it for processing our own firm’s payroll. After having used it for one year, we were convinced that with Payroll Relief we can offer a hassle-free, profitable payroll service. In 2007 we started offering payroll services to our clients, and within a short span of 6 months we had added nearly 50 payroll clients. We are extremely satisfied with Payroll Relief and AccountantsWorld, and hope to grow our payroll service to 150 to 200 clients.”
And Gottlieb Bright, an accountant in Beltsville, MD, who moved 20 of his payroll clients from a desktop solution to Payroll Relief, has this to say: “With our previous system, I was spending an awful lot of time processing payrolls. When we migrated our clients to Payroll Relief, we trained them on the system. It was very easy. Now most of my clients enter payroll data and print checks themselves. Payroll Relief takes care of all the compliance behind the scene for me. All I do is review the payrolls before finalizing. I am generating $25 to $50 per payroll and spending just five to 10 minutes on each. That’s how payroll has become my most profitable client service, providing a year-round revenue stream.”
Heeger: One of our CPA customers, Phil Christensen of Christensen Consulting LLC, currently serves 68 payroll clients by himself. He sets up clients to manage most payroll tasks themselves. Interestingly enough, Phil earns more revenue from payroll than from all other services including tax and accounting. His profit margin from payroll is 80 percent.
Mottola: Ceridian Small Business has held long-term relationships with a number of firms, some spanning decades and successive generations. As these firms built their practices and diversified the services they offered to their clients, we’ve been a trusted partner by providing valuable, cost-effective payroll and HR management services to our mutual clients. Every time they make a referral they’re putting their reputation on the line. We never take that for granted, always keeping in mind that that trust must be earned every day, with every interaction between the client, the firm and Ceridian.
Next week we’ll take a closer look at success stories about CPA firms who have used payroll/HR solutions offerings to build their practices and what solutions are available to help CPAs overcome their concerns about tax reporting requirements, staffing issues, technology requirements, liabilities and fiduciary responsibilities.
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Hank Berkowitz is the Publisher of AICPA’s Insider™ electronic newsletter group.
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