Save Your Client Money: Now is the Time to Switch your Client to a New Online Payroll Service

Helping small businesses stay organized is part of our job as accountants or bookkeepers. We manage all their accounting and bookkeeping and do their payroll. The one thing we hear from our law firm business owners, time and time again, is how confusing the various payroll service providers are. 

It can be overwhelming when looking for a payroll service for your clients. Many options exist, but not all are right for each particular business. 

Payroll is not just about paying the employees; it also holds much responsibility. There are so many laws and regulations that you have to abide by to stay in compliance. Let's tackle the questions our clients may ask us in a discovery call or during the onboarding of a new client: 

What are the benefits of using payroll services for small businesses?

Business owners sometimes need to be more relaxed about outsourcing some of the operational aspects of their business. Particular areas, such as payroll and HR, are better suited to outsourcing. When it comes to processing payroll, there's a lot more to it than just collecting employees' hours, calculating wages, and issuing paychecks. Your payroll administrator must also know all federal, state, and local requirements. They also need to understand how to factor in deductions for health care, Social Security, employee tax withholding, and employee benefits.

Outsourcing your payroll to an experienced provider can be a massive asset to your business in terms of productivity. If you're thinking about hiring a company, here are some of the benefits of outsourcing payroll:

• You'll save time doing the client's work
• Your client will save money
• As an accounting professional, you will have access to expert knowledge
• The data will be more secure
• Your client will stay compliant
• Your role is now their trusted advisor

How much should a payroll service cost?  

The cost of payroll services can depend on a few different things. The most common way payroll processing is priced is on a per-employee or per-check basis, in addition to a base account fee. The amount you'll be charged for a base account fee can differ depending on the provider, but you can expect your client to pay anywhere from $20-$100 per month. In some cases, you may also be charged a one-time account setup fee. 

It's important to note that the pricing for payroll services can vary depending on the specific needs of your business. Considering the top product line offering is essential if you work with a mid-sized law firm and have many employees. Similarly, you may be charged a higher rate if you have special requirements, such as weekly or bi-weekly payroll processing.

You must compare "apples to apples." While some payroll services may seem less expensive than others, as the accountant doing the cost analysis, you need to look at a few of the ways you are billed.

• Does your payroll service charge per month or payroll run?
• What is the fee per employee?
• Are there "extra fees" at year-end for year-end tax filings?
• What is included in the service? 
• What benefits are included? Are there HR services, 401k, and health insurance?
• What are their support hours? Are they readily available when you need them?

What Should Be Included in Your Payroll Service?

There are multiple tasks to consider when processing payroll. Below are a few of the most common and most important to consider:

Payroll Taxes

As an employer, you're responsible for withholding the correct payroll taxes from your employee's paychecks and paying them as required (monthly, quarterly, or annually). There are federal and state payroll taxes, and you'll need to determine the appropriate tax rates to ensure your calculations are correct. Employer payroll taxes must be paid out of your bank account.

Income tax, Social Security, and Medicare are all federal taxes that must be withheld from employees' paychecks. State taxes vary, depending on the state.

Workers' Compensation

In most states, purchasing workers' compensation insurance is mandatory to comply with the law. This type of insurance covers expenses that may arise from employees getting injured while on the job. In most cases, it is funded through private entities and is regulated by the state.

There are very few exceptions to the workers' compensation insurance requirement. The only state in which employers have the option to opt out of purchasing it is Texas.

Garnishments

As an employer, you may be responsible for managing court-ordered garnishments from an employee's paycheck. This can happen if the employee is behind on child support or if there is another debt that the court has ordered them to pay.

If you receive an earnings withholdings order, you must act quickly to comply with the order. If you don't, your client's firm may be responsible for paying the funds yourself.

Tax Filings and Staff Classification

Your client is responsible for withholding and paying taxes to the IRS and other tax agencies as an employer. Tax filings allow the agencies to verify your reports. Processing payroll tax returns is part of compliance and may keep the attorney awake at night. Know that it is your responsibility to keep the law firm compliant.

It's essential to make sure your team is appropriately classified. Make sure you know the differences between W-2 employees and 1099 contractors. There are many other payroll forms employers may need—some at the beginning of an employment relationship and others more regularly, like quarterly.

As the bookkeeper, you also need to show total wages paid out, which includes year-end W-2 forms that must be mailed by Jan. 31. If you're using contractors, you'll need to send 1099 forms.

My Recommendation

QuickBooks Online Payroll is my choice for payroll providers for my clients for a few key reasons:

• QuickBooks has competitive pricing and established experts to help you set it up.
• It's "in the product." Your client won't need to log in to a different website, making life more convenient.
• There's no need to back code the payroll from an external website and have the journal entry automatically pushed into your accounting software.
• Intuit has improved security by implementing multifactor authentication (MFA), and I would highly recommend adding that feature. MFA adds an extra layer of security by requiring users to verify their identity using multiple factors, such as a code sent to their phone or an authenticator app. Adding MFA makes it much harder for hackers to access sensitive data. 
• Payroll support when you need it:  Intuit has greatly improved its support. And it is support in the style every busy accounting professional needs. I can schedule a call, get a callback, or use chat. They are always available when we need them - no limited hours here.
• Did you know that if your client's SUI tax rate changes, you can go into the payroll program and adjust the rates accordingly? This is true even if the new rate affects past payrolls. With Quickbooks Online Payroll,  we have the power to make these changes ourselves without having to rely on payroll support. 
• Another favorite feature that saves me time is the automated tax notice feature. The steps are outlined in the link, which is as easy as uploading right into the product.  Takes seconds.  No more calling or clunky portals. 
• Have you ever worked in a payroll program that limits your pay types? Frustrating!  With QuickBooks Online Payroll, we have unlimited hourly pay types.

With QuickBooks payroll, you can see the paystubs inside the product, making bookkeeping more efficient. Finally, you can job cost the wages WITHOUT journal entries, and you can classify the payroll - making it easier to manage.

Did you know that, per the IRS, 33% of employers made errors in payroll entries that resulted in fines?  The guarantee with QuickBooks payroll that includes penalty protection is likely the most significant selling point for my clients. They constantly worry about this - what if there's a mistake? What if there's a fine or penalty? You can put your client's fears to rest by using the QuickBooks Payroll Elite version. 

The last perk is for us, as accounting professionals. We are busy! Having the payroll onboarding team do the work to ensure the payroll is onboarded correctly is a MUST! If you are switching mid-year, that is a big time saver.  Additionally, as an accountant, you can save money with ProAdvisor discounts that you can save for your own firm or pass to your clients.

Today's blog discussed how switching your payroll service provider could save your client money. Advising your client on payroll service offerings will make you their entrusted advisor.

Switching may be included in your service offering with the right online payroll services. Many payroll companies will charge you for extra tasks not included in the fees you thought you signed up for with an online payroll provider. With this information, we hope you can provide your client with the best new payroll provider. 

Do you want to learn more about the advisory services you can provide your clients? We discuss this in The Accountant's Law Lab. Join our group and learn from the industry's best legal accountants and bookkeeping professionals!

This blog post is a paid partnership with Intuit.