Payroll services: 7 reasons why your practice should provide them
Accountancy practices that offer payroll services can add value to their clients and generate higher revenues. Learn how yours can do it.
Many small businesses choose to save time and money by outsourcing their payroll services to external providers such as accountancy firms and payroll bureaus.
Read this article to find out why your practice should consider offering them to clients.
What are payroll services?
Payroll services covers a number of employment-related activities undertaken by businesses.
They include processing the payroll and providing payslips and T4 forms to staff, completing payroll year end submissions, calculating tax, CPP and EI.
Why payroll processing gets outsourced
“Payroll processing can be time-consuming and it requires a lot of checks before submission to ensure that the correct information is submitted and employee wages are correct,” explains Mariah Tompkins, director of accounting firm WKM Accountancy Services.
“By outsourcing payroll, in-house teams regain a lot of time that can then be used for other important business activities.”
Outsourcing also enables businesses to access knowledgeable payroll professionals – which is an important consideration given the complexity involved with administering payroll.
“In-house staff might not have all the relevant expertise to cope with all the regulatory changes and announcements needed in a small business,” explains Geoff Matthews, owner and partner of an accountancy firm Matthews Business Associates.
“In that case, it can be better for payroll to be run by outside experts who are aware of the current laws, rules and regulations.”
Seven reasons to offer payroll services
Accountancy firms that offer payroll services to their clients benefit in a number of important ways.
So, what are the key reasons why your practice should offer payroll services to your clients? Here are seven worth considering.
1. You’ll be able to add more value to your clients’ businesses
If your accountancy practice can be a one-stop shop, it can provide a full service that covers everything your clients need.
It can also help them to comply with CRA filing requirements and statutory legislation.
2. You can generate more revenue for your practice
Payroll services can be a significant additional income stream that clients pay for on a regular monthly basis, making them particularly valuable during times of economic uncertainty.
They can also open the door to new clients who may not have considered using your practice before.
3. You’ll be in a better position to offer advice
By offering payroll services, you’ll better understand your clients’ businesses, which will help you to develop a closer working relationship with them and possibly enable you to sell additional services.
4. You can develop a lucrative niche
Some accountants run payroll services for businesses in specialist sectors, such as agriculture and hospitality, which have specific requirements that may include zero-hours contracts.
5. You can simplify year-end accounting processes
If your accountancy firm manages your clients’ payroll in-house, payroll data will be instantly available at the tax and financial year end, as well as for audit purposes.
6. You’ll enhance the brand value of your firm
Clients are more likely to believe they will get a higher level of service from accountancy practices that administer payroll in addition to offering accounting and tax services.
7. You’ll be helping your clients
By removing a significant administrative burden, you’ll be enabling your clients to focus on growing their businesses.
Where should you start with offering payroll services?
It’s important to undertake thorough due diligence and research before offering payroll services to your clients, so you can tailor your offering and price it accordingly.
Firstly, you’ll want to establish what kinds of requirements your clients tend to have, such as the following:
- Do they run large or small payrolls?
- Do their staff use timesheets?
- Do they offer additional benefits such as health insurance and company cars?
- Will your clients want you to provide them with add-on services such as payroll reporting?
The complexity – and time – involved with running a payroll can vary according to these factors and others.
As part of your market research, you should ask professional contacts within your network about their own experiences of running payroll services.
Also, find out what kinds of services your competitors are offering – both other accountancy practices and dedicated payroll bureaus.
Running your payroll services
Naturally, you’ll need to think about who will run your payroll services.
If you don’t already have the expertise in-house, you’ll either need to hire a payroll professional to support you or upskill an existing team member.
A number of training courses exist, including those run by the CRA. As well as knowledgeable staff, you’ll also need someone to oversee payroll at a leadership level.
“Make sure you have a partner in your practice who is responsible for payroll and understands what is done on a day-to-day basis,” advises payroll consultant Kate Upcraft.
“It’s much more complicated than it was 10 or 20 years ago. Someone senior needs to make sure that they and the payroll team keep up to date with changes in legislation – employment law as well as tax, EI and CPP.”
Technology to use
Once you have an idea of what your payroll services offering will look like, the next step is to invest in the technology to support it.
There’s a wide range of payroll software options on the market. When choosing the package that’s right for you, look for efficient and reliable software that has the features you need to run your payroll services cost-effectively and deliver on the expectations of your clients.
For business continuity purposes, it’s also essential to use a cloud-based package, so your practice staff can be based in any location when they are running your clients’ payroll.
Conclusion on payroll services
Efficient payroll is crucial to the smooth running of all businesses. For that reason, it’s a big commitment that needs to be undertaken with accuracy and care.
When you offer payroll services, you are fulfilling an important responsibility on behalf of your clients. “Payroll isn’t just about paying people,” notes Upcraft. “It’s so much more than that.
“If you don’t pay people properly, they won’t go to work. They expect to be paid on time and accurately – every week or every month.”
It’s important for accountancy practices to at least consider the benefits of offering payroll services – not least because of the opportunity cost of not doing so.
“The consequence of not offering payroll services is that the client may approach another accountant who does and that accountant might convince them to hand over other parts of their business,” says Shoaib Aslam, CEO and founder of accountancy practice Pearl Accountants.
Although payroll services can be time-intensive to deliver, and they do require accountancy practices to invest in both staff and technology, they can nevertheless be key to enabling practices to grow.
“Offering payroll as a service has given us a significant opportunity to grow our business by providing us with an additional revenue stream,” adds Tompkins. “It has also made our day-to day-work for our existing client base much easier.”
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