Managing Payroll in the Cloud
My firm’s journey to the cloud has been very fast moving. In the past 5 years, I have observed the following trends. Web-based and mobile/app based services have boomed in an unprecedented fashion, the average age of entrepreneurs is reducing rapidly and they are getting more and more techie, and my clients are expecting answers and reports from my work in almost real-time.
Time is no longer something clients are willing to compromise. They are expecting all their data to be accessible on the spot from the computer, phone and tablet. As a result, my firm had to swiftly move to the cloud; otherwise, I would not be able to satisfy my clients’ needs and would become irrelevant. Today, these are some of the services we offer that are 100% cloud based:
- Bookkeeping and accounting is being done directly in QuickBooks® Online or on hosted servers that the client and myself can access anytime.
- Integration of QuickBooks Accountant to other cloud-based services such as their customer relationship management system where they handle all their customer communications, project management applications; and daily sales information for their shopping cart to avoid double data entry of invoices.
- Payroll services
Do not get me wrong. I still have about 50% of my clients who we are still in the process of moving to the cloud, and I look forward to the day we are 100% there. All my cloud clients have seen a significant increase in the speed of delivery of our services. They can get financial reports faster because I can work with the data faster. The best part is we are charging the same or more in some instances, while spending less time moving data files back and forth or performing data entry.
Back to how we made the transition to the cloud. … because there is a learning curve of working in a whole new way for our firm and clients, I knew we were not going to be able to just turn the switch and magically just be 100% in the cloud. However we found that the easiest, fastest, and most impactful service to move to the cloud was payroll.
Yes, the dreaded payroll! Most colleagues have mentioned that payroll has traditionally been one of the most labor-intensive and low-paid services offered and, therefore, is the least profitable.
Why start with payroll? On a daily basis, our staff was consumed by payroll support-related tasks including reprinting a paycheck, verifying or executing a tax deposit payment, reprinting or resending W-2 forms, and updating employee W-4 info. In addition, whenever a client demanded these services, it was usually an urgent request and was often difficult to substantiate additional billing for the time required to take care of these requests. By moving to the cloud, our clients could access their data and forms whenever they needed it, which made it a lot more convenient for them.
The next step was to tell all my clients that we will no longer do any of the following: accept timesheets via email or fax; input w-4 information in our payroll systems; paper file 1099s, 941s and W-2s; send W-2s via e-mail; or even input manual payroll checks to calculate the after-the-fact payroll taxes. Most of my clients’ initial reaction was, “So I guess you are no longer offering payroll services?”
They guessed wrong! We now provide an even more comprehensive payroll service. We do it 100% by using Intuit’s® different offerings. Here’s how I determine which service is best for the client depending on their needs.
Intuit Full Service Payroll
For our clients who very needy and used to call twice a week to ask the same payroll-related questions, I refer them to Intuit Full Service Payroll (IFSP). We charge our clients to help them set it up and show them how to use it. We also charge for the time to review the quarterly payroll forms and W-2s before Intuit files them. We avoid double data entry because IFSP integrates with QuickBooks. It’s easy to automatically download all the detailed paycheck info into QuickBooks.
It is important to keep in mind that with IFSP, payroll is 100% handled by Intuit, which means it is important to have all employee information handy in order get clients set up as quickly as possible.
Tip: Organize payroll information such as employee pay rates, paycycle schedules, W-4 info, YTD paystubs with YTD wages, and tax information, and have it readily accessible so you have this data for setup. Based on my experience for most companies, setup will take under 2 hours, including the setup phone call, entering basic data in the system, setting up direct deposit and faxing tax filing authorization forms.
Depending on the number of employees, most of our clients pay under $100 per month to Intuit for this service. Intuit takes care of all the filing of payroll tax forms, paycheck calculations, access to electronic tax deposit, W-2 generation and, most importantly, Intuit is available to answer clients’ support questions. This frees up a lot of my firm’s time.
QuickBooks Online Payroll (Payroll right within QuickBooks Online)
This option is for all my clients who already use QuickBooks Online, pay for their own subscription and want to create paychecks from within QuickBooks Online.
We work in a highly collaborative environment. Typically, our client’s employees enter timesheets in QuickBooks Online, then the manager or business owner processes payroll, and we come in once per month or quarter to process the electronic tax payment and electronic filing for the forms after reviewing them. For the semi-weekly tax depositors, we typically train the client to process the tax payments (tax deposits) and reconcile them against 941 quarterly before filing.
The average client pays Intuit an additional $20-$30 monthly in addition to their QuickBooks Online subscription. What I like about this is that the client pays for the platform and does all the data entry work. We do what we love, which is to review the books, prepare tax forms to make the client compliant and give advice on payroll instead of entering paychecks. Best of all, all tech support questions related to day-to-day timesheet and payroll check deduction/addition questions are handled by Intuit’s customer service department.
Intuit Online Payroll for Accounting Professionals
Intuit Online Payroll for Accounting Professionals (IOP4A) is the best of both worlds. IOP4A provides me with the cloud-based platform for us or our clients to enter timesheet data and process paychecks, while allowing us to charge for payroll services. We can choose to give our clients access to just paychecks or choose to give them tax payment/tax form filling capability.
This flexibility allows us to choose the level of payroll service the client is looking for – and with wholesale pricing, as we add more clients, our cost per client decreases. We have the flexibility to determine how much we want to charge our clients for our payroll services. Essentially, this is the best choice when clients want to outsource the payroll to their accountants and be able to process their paychecks in the cloud.
Tip: IOP4A has a great unified dashboard with all the client’s to-do tasks, including tax payments due and forms due, in a single page. This makes supporting a high number of payroll clients so much easier.
All the Intuit payroll offerings I describe here are 100% cloud-based, which means the following are always available from any computer and any device – even from your smartphone and tablet – so they are easy to access:
- Historical Paychecks
- Tax Deposits information
- Current and previous tax forms (941s, W-2s)
- Employee Information
- Employee capability to enter time from anywhere with Internet access
No more sending clients their W-2s for the 20th time this year. No more manual processing of payroll data! No more timesheets on our fax machine. No more after-the-fact payroll tax calculation. No more manually entering paycheck data in QuickBooks. No more spreadsheets with manually calculated paychecks.
I have found that clients across many industries were a good fit for moving payroll to the cloud. Among some of the clients I have moved to cloud-based payroll in the past few years include a dentist office with 12 employees, a yogurt shop with 8 employees, a catering company with 2 employees, a staffing consulting firm with 4 employees, a painting contractor with 1 employee and 20 1099 contractors, an import/export company with 3 employees, and a hospital with 140 employees.
Yes, there may be a small cost component to moving to the cloud and a small learning curve for accountants and clients to work in the cloud. Some clients will fit perfectly into this model and some clients are just not ready, but one thing is for sure: moving to the cloud was the best move my firm has made in years, bringing hours of wasted time back to billable time and giving the clients that “real-time” service they are looking for.
I strongly recommend that if you are considering moving completely or even partly to the cloud, start with payroll. Intuit has the best tools in the market.