By Chris Rush, Division Vice President of Strategy and Business Development for ADP’s Small Business Services Division
To many clients or small business owners, payroll can seem like yet another piece of an already complicated puzzle. Recent changes to federal, state and local laws on overtime rules, minimum wage and paid sick leave have made this task even more complicated, increasing the risk of noncompliance fines for employers. As they adapt to regulatory changes and anticipate more in the future, small businesses are looking to their accountants to manage the payroll process.
And that’s good news. In fact, according to a recent ADP white paper, 43 percent of accounting professionals indicate that payroll is one of the most profitable segments of their business.
By adding payroll services to an existing suite of accounting options, accountants can meet the demand of clients who want to better understand their payroll and how they can streamline it. At the same time, payroll can open up new opportunities, allowing accountants to increase the strength and frequency of client interactions beyond tax season.
As accountants continue to look for new ways to better service clients, those who already offer payroll are starting to:
- Build stronger client relationships. According to the August 2016 Accountants Confidence Index (ACI), 49 percent of accountants offering payroll do so to accommodate their best clients. Another 34 percent are looking to deepen existing client relationships.
- Establish more effective client communication. The February 2016 ACI results indicate that many accountants are still struggling with how to best communicate with their clients. Nearly 40 percent indicate they have “no set strategy or plan” when it comes to established, periodical avenues of client communication. For accountants who offer payroll, however, client communication is a valuable standard feature. Payroll comes with a unique, baked-in invitation to communicate on a consistent basis.
- Assume the role of guide through a complex and changing regulatory environment. Regulatory requirements are continuing to change. Accountants have the professional knowledge and tools to solve a lot of problems for their clients, giving clients one more important reason to use their services.
- Reveal the value of technology. A payroll business can help an accountant open the door to brand new areas like data analytics since pay data can tell an accountant a lot about a client’s business. Technology is helping accountants mine and use an abundance of existing client data – particularly data regarding payroll – to turn the page to new, nontraditional accountant offerings that can profoundly improve client performance.
- Expand payroll-related services. As accountants compete with off-the-shelf tax software and nontraditional online competitors, some accountants are deciding to expand their payroll business. About 47 percent of accountants in the July 2016 ACI acknowledge they have seen an increase in their clients’ needs for HR services as a result of legislative changes. Technology enables accountants to bundle these types of services with payroll and charge a premium without becoming an HR expert.
Clearly, accountants can benefit from offering payroll. Doing so can strengthen client relationships by increasing interactions with clients and providing a built-in channel for regular client communications. Accountants who don’t offer payroll could also miss out on an opportunity to benefit from a recurring source of revenues and profits.