Improving Service Through Online Payroll

By Anu Sanghvi

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MARCH 2007 - Online technologies have enabled payroll services to become a popular way for accounting firms to improve client service, enhance loyalty, and gain incremental business. The 5.1 million small (fewer than 20 employees) businesses across the country can use the help dealing with their payroll. Small companies have the same tax burden as large employers, but they don’t have nearly the same resources to comply with regulations and deadlines.

Many small business owners turn to their accountant for back-office services while they focus on growing their businesses. According to the National Payment Corporation, 90% of small businesses prefer that their accounting professional handle their payroll. Despite this strong demand, accountants have traditionally shunned payroll work.

The majority of small employers are currently doing payroll by hand, which opens the door for errors and penalties. In fact, according to the IRS, one out of three businesses is penalized each year, for an average of $1,300.

New Technology Presents Opportunities

The advent of “software as a service” payroll technology has made it feasible for accountants to get involved with payroll services.

By offering live payroll services, accountants can solidify their role as a trusted advisor and strengthen client loyalty. Most importantly, they can ensure that small business clients are compliant with regulations and deadlines at all times, not just at quarter-end.

With online solutions, there’s no up-front investment in software or ongoing tax tables to download. Sensitive data is securely stored on servers that are protected and automatically upgraded. Professionals can retrieve client data from any location, using an online dashboard. There’s no need to be tied to the office on payroll deadlines.

Some online solutions also allow professionals to decide how to be involved on a client-by-client basis. A company could be set up to log in and manage payroll on their own, while their accountant maintains real-time access to their information online. Or an accountant could use the payroll solution as a “back-office” tool to offer all of its payroll services. Some online solutions provide toll-free support, thus reducing the need for prior payroll experience or investment in training. Many online services offer a flat monthly fee with no extra charges for direct deposit, electronic tax payments and filings, W-2s, or customer support.

Technology can make offering payroll services profitable for accountants. Paycheck calculations are instantaneous, and most software offers several payment options, including direct deposit or local paycheck printing on blank and preprinted check stock. Some providers also send e-mail notifications when pay stubs are ready.

Marketing the Service

Once accountants recognize the benefits of providing online payroll services, they can explore how to grow that practice. But many worry that their lack of marketing experience will hamper growth.

It is worth remembering that the simple and fundamental acts of delivering quality services and caring about clients are also the most basic tenets of successful marketing. By simply nurturing and sustaining client relationships with integrity, quality work, and trust, small accounting firms can attain what larger companies spend huge sums on advertising trying to achieve.

Nevertheless, many online payroll services recognize that accounting professionals appreciate some coaching in the marketing area. As part of their subscription package, they might offer marketing tools such as firm-branded websites, demos, editable sales letters, and ready-to-print brochures. These tools help professionals promote their payroll services without a large investment in marketing.

It is not surprising that many accountants remain cautious about online security. It’s what clients expect from a trusted advisor. To ensure that their systems are secure, the leading online providers employ the same technologies used by the largest U.S. financial institutions.

Those accountants who do adopt online payroll solutions often find that they can help solidify client relationships and attract new small-business clients to whom they can cross-sell other services in the future.

Anu Sanghvi is the director of the accounting professionals program at PayCycle (, a provider of on-demand payroll for professionals who serve small business clients.




















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