The Payroll Payoff Position Your Firm as an All-Service Provider
Every business has to pay its staff and its taxes. Many CPAs are addressing those twin needs by offering to help their small business clients not just with taxes but also with the many chores that go into payroll processing, from after-the-fact tax filings to benefits administration. A smart way to grow "Payroll services are about three percent of my practice, but offering them is part of being a full-service accounting firm," says Daniel M. Ukestad, CPA, a Carmel, California, sole practitioner who does after-the-fact payroll for about a dozen small business clients. He provides those clients with tax and consulting services, not audits. He also does domestic-staff payroll for older individuals with household help. At Faulk & Winkler LLC of Baton Rouge, Louisiana, principal Monica Waller is responsible for client accounting services (CAS). "Payroll services is a small part of our business, but it works hand in hand with CAS, including general ledger, financial statements, accounts payable and accounts receivable, tax and pension work," she says. When tax partner Denise Carvalho, CPA, sees a client who might benefit from payroll services, she brings Waller in to discuss how to help. The firm has handled payroll since 1984 but says improved technology has made it easier in the past five years. It's a good fit with services such as pension work that must be in a prescribed electronic format. "It has become a real selling point for pension administration clients to transfer their payroll to us," she says. Principal Joseph Maloney, CPA, of four-partner firm Maloney, Reed, Scarpitti & Co. of Erie, Pennsylvania, says, "Payroll has provided about 10 percent of our business for 25 or 30 years." The firm handles the entire process for most payroll clients--prepares their checks, arranges for the deposits, and makes sure the clients' payroll taxes are paid on a timely basis and their quarterly and annual returns are correctly prepared and filed. Using a CPA firm offers them confidentiality and personalized service. "Clients like to deal with only one provider," he says. "They know the individual who answers the phone, and they can let us deal with changing tax rates and payroll laws." Ukestad's small business clients prepare their own paychecks--some by hand--and use his services to make sure their tax records are correct and deposits are on time. "I educate them on how to prepare payroll and how and when to make the deposits," he says. He prefers that larger clients use a national provider. James Hayden, CPA, a Montvale, New Jersey sole practitioner with six staff members, says payroll represents about 10 percent of his firm's revenues. He refers clients with more than four employees to the same national payroll provider he has used for 25 years. "We can rely on their work and access reports online. If they make a mistake, they rectify it." Ilene Eisen, CPA, of ie Solutions in Monterey, California, also recommends national payroll providers to her clients for their broad capabilities. To help clients meet filing and deposit guidelines she suggests a national payroll provider "since they can download the information into their accounting records easily," she says. Which type of payroll provider is best for your client? What you recommend to clients depends on their sophistication and what you perceive they need. Big payroll companies offer a large number of Internet-based payroll-processing services and products, and employ experts to track accounting intricacies and ensure clients are in compliance with local and federal tax laws. Many payroll providers offer such simple user interfaces that "CPAs may have a hard time convincing clients to use their help," says Steven Bragg, CPA and CFO of Premier Data, in Englewood, Colorado. His payroll provider can process payroll through a Web browser interface and also permits complete integration with a centralized 401(k) investment module, which automatically makes 401(k) deductions from employee paychecks and eliminates the need for separate tax filings, administration reports and payments, he says. …