How does your payroll strategy affect your firm? We sat down with Blaine Hebert of the firm Hebert, Carbo & Crutchfield, CPAs to discuss how offering payroll services benefits his firm and his clients.
Hebert began his own firm back in 1989 as a sole proprietor and has grown to ten staff members with four CPAs on staff. He specializes in small business consulting, state planning, and a wide range of services relative to tax and accounting. He is a member of the Society of Louisiana CPAs, a previous instructor at Northwestern State University, and has partnered with myPay Solutions since December of 2008 to handle payroll for 60+ clients. In the beginning, his firm only offered accounting services, but clients wanted their payroll done as well.
Evaluate your current payroll strategy
What direction do you want to take your payroll offerings? Take a good look at how you’re managing your clients’ payroll now. Are you doing it yourself? Are your clients doing it themselves? Maybe you’re using a hybrid approach, where you do some, your clients do some, and a third party does some. Regardless of how you’re currently handling payroll, there are some important things to consider, including:
- Do you have the staff to offer full service payroll services?
- Are you saying “yes” to every payroll opportunity?
- Are you invested with a third party payroll vendor?
- Are you prepared to handle legislative changes and stay in compliance?
For Hebert’s firm, they had to change their payroll strategy and decided to move into a partnership with myPay Solutions. Hebert says that there are several benefits to a partner-sourced payroll solution.
Expect the unexpected with payroll
With payroll, oftentimes, the unexpected comes up. A client might have forgotten something, or a mistake is made (human error). It is important to respond and communicate with client in a timely manner when something goes wrong. That personalized service is a benefit on both ends. Hebert explains:
“I knew I was doing payroll because it just needed to be done. One thing I discovered was when clients received tax notices from the IRS, 75% of those were payroll related. My firm wasn’t doing anything wrong; it might’ve been that the client wasn’t doing payroll correctly, or a deposit wasn’t made on time… something was going on where there were issues popping up.”
It wasn’t because his staff did a bad job. However, in dealing with clients, payroll gets complex and when an unexpected IRS notice comes, you must address it. As most practitioners know, it’s hard to charge full rates when a tax notice is received, even if it was due to client error.
“Clients expect firms to guarantee everything when there is an unexpected notice from the IRS and they don’t want to be charged for it. This can sometimes make for an adversarial situation with clients. I found the solution when we switched to myPay Solutions and we were able to offer a comprehensive payroll solution as a part of our services.”
Many firms may have challenges around the fact that they’re offering payroll as an accommodation service. You may feel like your firm needs to offer payroll to get the full business from the client (knowing they want you to do payroll for them). Hence, as an add-on, you take that payroll service on (even if that’s really not the kind of work you want to be doing).
“I didn’t want to tell clients to go somewhere else to do payroll because they might find another accounting firm, and next thing you know, they pull their whole account over to the other accounting firm. But a solution that covers all the bases allows for a full-service experience for the clients who want payroll and takes that worry out of the equation.”
Payroll is a growing segment. More businesses have a need for it, which is a good thing from an economic standpoint. Yet, as the segment grows, it’s not getting easier to keep up with payroll along with everything else you have to do at the firm.
One solution may be to have a few dedicated processors in your office who work very closely together to manage payroll. With at least two processors, if someone goes on vacation or is out unexpectedly, you have a backup. You’ll need to also determine a payroll disaster preparedness plan for how you will continue payroll processing in the case of an emergency. Payroll doesn’t stop, no matter what happens.
Hebert explained that his firm chose to partner with a full service payroll provider to take the pressure off of his staff, freeing them up to work on more valuable work. He said that his bookkeepers had traditionally handled client payroll. Once they transitioned payroll to myPay Solutions, his bookkeeping staff was able to take on more accounting work and more clients.
“Staff were answering fewer payroll questions, and they could actually do the work they were trained to do: accounting, auditing, those kinds of things. I’m also receiving less and less questions about payroll.”
Hebert thinks that accounting firms should concentrate on areas where they’re helping clients at a higher level, with strategic planning and an eye towards the future. Implementing a full-service, partner-sourced payroll solution adds a level of efficiency for firms in a big way because it takes a high resource area of the business out of the equation. That’s another reason he chose to work with myPay Solutions for his clients’ payroll needs.
“We can still talk to clients about their payroll because we can login to the same portal they use to see if there are issues or what needs to be done. And of course, we have a great relationship with our sales rep and with our processor. myPay Solutions has preserved that client relationship between the CPA and the client very well.”
In part 2 of this blog, “Offset the challenges of payroll compliance with a good payroll strategy,” the discussion continues with how to stay informed of new payroll changes with ease and why payroll compliance is an important part of the process.