How to Determine Whether You Should Help Your Clients with Payroll

This is the time of year when clients review, or should review, their current workflow to determine what works, what doesn’t work, where the hiccups are and how can they make running their business better going forward. We, as accountants, can help them in this process.

One of the major areas we need to review is payroll. We need to determine how our clients are processing payroll now (if we don’t already know). They could be doing it on their own with one of the QuickBooks® integrated payroll products. They may be using an outside payroll service, which means they then have to re-enter payroll in QuickBooks. They may even be processing payroll manually!  Remember looking up taxes in the Circular E?. If they are processing manually, they may be more likely to make mistakes, are getting tired of those tax notices and still have to get the information into QuickBooks.

What can we do to help our clients in the payroll arena? How can we best collaborate with them? Are we missing an opportunity to develop new clients? There was a study done by Intuit® in 2011 that surveyed how small businesses currently process payroll. The results are in the pie chart below.

Based on the study, 30 percent of small businesses do payroll manually! 30 percent! This gives us a great opportunity to offer training, recommend payroll options, and maybe even collaborate with our clients and grow our practice at the same time.

The first thing we need to do is determine our level of involvement in payroll. Work with your clients to answer the following questions:

  • What are their payroll needs – i.e., more than one state; job costing?
  • Do they need time tracking?
  • What are their abilities – do they know enough about payroll to do any of it on their own?
  • What accounting software do they use – QuickBooks Online or QuickBooks Desktop (Windows or Mac)?
  • How do they see the collaboration working? This is a very important question to ask because they may have an idea about what they want to do.
  • How easy is it to access their records? This answer is probably dependent on the answers to some of these other questions.
  • Where are they located – do they travel a lot and/or do they have more than one location?
  • Where are you located – do you travel a lot?
  • Are they Internet savvy? If you move them to a cloud-based solution, will they be comfortable with that and eager to learn?
  • What skills do they have – i.e., computer skills, Internet skills?

Answers to these questions will help determine the right solution.

No matter what you are going to recommend or how you are going to collaborate, I have no doubt that it will include some aspect of ”the Cloud.” It may be using a cloud payroll service, time tracking service, portal, hosted solution or remote access.

When I look at cloud computing, I remember when we went from DOS to Windows. It seemed to me that the accounting programs were the last programs to switch over … probably because we accountants don’t like change! And here we are again!

I recently saw a slide presented by Heather Kirkby, director of Product Management and Marketing for QuickBooks Online, that showed the evolution of the cloud. The first email was sent in 1971. Twenty  years later in 1991, the first webpage was available. In 2000, SaaS (Software as a Service) was introduced. Interestingly enough (not on her slide), QuickBooks Online launched in 2001. Over the last 10 years, we’ve used the cloud to educate ourselves, shop, bank, communicate, watch TV and movies,  AND do our accounting and prepare our payroll!

Why Should Our Clients Use the Cloud:

Anywhere/Anytime Access. We hear this all the time, but what does it mean? It means just what it says. If I have an internet connection, I can access files and process transactions. I don’t have to travel; I just have to log in. Our clients may say that they always work out of their office, so are not interested in a cloud solution and then call in a panic because they’re on a business trip and forgot to process payroll. They need us to help. We might have to drive to their office to help them out. If they were in the cloud, it would alleviate that issue.

Files in One Central Location. I have clients who have a computer in the office, another at home, and then move files back and forth. I have another client whose bookkeeper wants the flexibility to work at home, so again, the files are moved back and forth. There is definitely risk in doing that. It would be easy to restore the wrong file or forget to restore the file at all. This causes extra work and a lot of aggravation. If my client were using a hosted solution, a portal or other online service, this problem, too, would go away. That being said, it took me 10 years to talk him into even buying a computer!

Increased Collaboration. When talking about payroll, we may be collaborating with our client. Perhaps they fill out timesheets and we process the payroll, or they create the paychecks, but we are doing the tax deposit. How are we getting that information? There is no need to fax, scan and email. Just keep your documents in the cloud for easy collaboration.

Reduced Up-Front Costs. If you have ever priced out a server, the client workstations and the cost to install, you know it can be a big expense. As we help our clients grow, we help them make decisions about capital expenditures. If they choose a cloud-based solution, they can tremendously reduce up-front costs. In addition, because most cloud solutions are subscription-based, the client is not purchasing the software and license fee upfront, and rather than being a capital cost that has to be depreciated, these monthly costs are normal operating expenses, currently deductible (my opinion).

Flexibility/Scalability. I think part of the advantage of working in the cloud is scalability. I’m working with a client now who is just starting the manufacturing process. He only needs one or two users on a system now, but when the business is in its full-blown manufacturing mode, he will need eight to 10 users. As his needs grow, he can add more users. Again, this keeps his up-front costs lower. If he needs more bandwidth, he doesn’t have to purchase a bigger server.

Automatic Upgrades. Because cloud solutions are typically subscription-based, working in the cloud allows SaaS providers to add enhancements without disrupting the client’s work. There is no need to wait until a new release is available and no need to install software. It just appears, usually with notification!

Security. Generally, files are more secure in the cloud than they are on the desktop. Why? Most small businesses are very trusting and get lax on setting passwords, changing passwords, restricting access to certain files and backing up. Cloud solutions  have redundant data centers, back up all the time, require passwords to log in and possibly, depending on type of work you are doing, require password changes. That being said, you will want to review the security policy of the cloud solution you are choosing to make sure it has a Service Organization Control (SOC report, formerly known as SAS 70) on file.

Disaster Recovery. There is no need for a disaster recovery plan. Cloud-based services have redundancy and back-ups built in to recover information if a disaster happened.

Environmentally Friendly. We can save paper. With respect to payroll, our clients don’t have to print paychecks; they can use direct deposit. They don’t have to print paystubs; they can set it up so that employees can access that information online. The employees can enter their time in the cloud. In other aspects of the business, our clients could have their vendors email bills and/or upload to a portal. There is great opportunity to at least use “less paper” (hard to go completely paperless) when using cloud based solutions.

As I read over this article listing the benefits of using the cloud, I realize I’ve been on a soapbox! I guess I didn’t realize how passionate I am about cloud computing! What does this mean for our payroll clients? We are the trusted advisor. They look to us for solutions. I think we have a great opportunity to educate them about the benefits of using the cloud, particularly with payroll, as it is a very time-sensitive aspect of their business. They have to get the paychecks out on time. There are deadlines for tax payments and tax filings. It may be that we collaborate with them.

Take the time out to educate yourself about cloud-based payroll solutions and other cloud based solutions, and sit down with your client (or do a remote session) to educate and advise. It really goes back to sitting down and talking with your client and answering the questions posed earlier in this article. You can then determine the payroll solution and how you can use the cloud to enhance the experience.