By 2022, payroll services are predicted to be an $85.6 billion industry. Getting in on an already lucrative and growing market opportunity such as payroll might have crossed your mind, but there are many things to consider when offering payroll services. The right approach to staking your claim in the payroll services landscape could be a win-win for your firm and your clients.
Some challenges around payroll and how to solve them
Payroll services can be a benefit to your clients and a growth engine for your firm. More small businesses are on the market for payroll services because they don’t want the hassle that comes with it. There is also large do-it-yourself (DIY) mentality in the world today, and DIY software vendors invest heavily in the marketing of payroll services to potential customers. Unfortunately, it sometimes takes the stress of receiving notices and fines when things go wrong to realize that DIY may not be the best option for clients.
According to the IRS, nearly 40% of small businesses pay an average of $845 in fines for late or incorrect filings when they use DIY for their own payroll services. The good news is payroll is often where clients first seek help. The bad news is that if you decide to offer payroll services, you may think you’ll inherit that stress. You can take that stress out of payroll by utilizing the right solutions.
Getting payroll customers is easier than you think, because many of your payroll prospects are already working with you. By offering a more complete suite of services, your firm not only attracts new prospects using payroll as a door opener, but you also provide additional value to your existing tax and accounting clients. Chances are, at least one of your clients has already asked you about payroll services. Clients see real value in getting a wider variety of services under one roof, making your firm a one-stop-shop.
Some clients seek out a CPA brand for payroll services
Why is brand important? Your brand is the identity the world sees as far as your image and how you generate awareness about your firm. If you add new value-added services like payroll, it may be time to give your brand a facelift. Try putting yourself in the shoes of one of your prospects: how do you look for a new product or service, and what is it that appeals to you? Web presence is key in showcasing your offerings, especially if you are adding or changing services, or if you want to brand payroll services as a complementary part of your business. Through a deep-dive research process, look at what your competitors are doing. From there, you can see the best way to brand your payroll services in the most compelling way for existing and prospective clients.
Rethink your client relationships
Think of the client relationship as a partnership, use resources to grow your social media presence, and let payroll services be an extension of the strong services you currently offer. Then you can focus on what you do best, providing the best in customer service as an umbrella firm.
Small businesses are more likely to outsource payroll for a variety of reasons. In a survey of 18,000 CPAs published by Thomson Reuters in 2017, 38% of accounting firms wanted to manage payroll in-house for clients, while 32% offered payroll through partnering or outsourcing.
Here are some reasons why more CPA firms might consider partnering with a third-party payroll provider:
- Ever-changing rules and regulations around payroll
- Complexities in payroll using up vital resources
- Demands for anytime, anywhere payroll data access
- Requirements around security and compliance risk
- Access to seamless integration into client data
- Gives firms the ability to focus more on client’s needs
Three-quarters of CPAs surveyed also say that the small businesses they serve don’t have the expertise to handle payroll on their own. How should you think about payroll services strategy and what you can do differently that would motivate clients to hand that process over to you? Firms have to look to the future and focus on improving revenue stream and attracting new clients. If you decide your firm won’t offer payroll services, your clients may turn to someone else for payroll, putting you at risk of losing those clients entirely to a competitor, which costs your firm more than you might think. If a client leaves, it’s not just the business you’re losing that impacts your bottom line.
According to the AICPA, it is eleven times more expensive to acquire a new client than it is to keep an existing one. It might require an upfront investment to begin offering payroll services, but in the long run, these added services will make your tax business a future firm.
Consider offering payroll services without the hassle by outsourcing it to a secure payroll services partner. This way, you can build revenue and client satisfaction without taking on the processing of payroll, but still reap the rewards. The benefits outweigh the risks as you expand your accounting business with payroll services offerings.