Payroll Articles

Perfect Your Clients' 2008 Payroll Solution

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Clients look to you for guidance on how to handle payroll. CPA Sandi Smith gives tips on which of your clients are most in need of a change - and how to approach them to have the payroll conversation.

The perfect time of year for a change -- year-end -- is approaching. Now is the time to start thinking about your clients' 2008 New Year's resolutions, especially when it comes to payroll. Payroll changes can happen all year 'round, of course, but it's so much cleaner to change at year-end.

Clients' Wish Lists

At this holiday time, let's make a payroll wish list for our clients. Here is one way to identify clients that should be on the wish list and that might benefit from a change in their payroll solutions.

1. Clients that are tethered to the office every Friday due to payroll obligations. Give your client the gift of freedom by finding a payroll solution that doesn't keep them chained to their desk. You know these clients: they are the ones who don't say "thank goodness it's Friday."


2. Clients with only one or two employees that are doing payroll in-house. Save this client from themselves. Poor segregation of duties could lead to fraud and embezzlement in the future. This client's best solution is to outsource their payroll to you.


3. Clients that are showing big fines in their payroll expense accounts. Missed tax filing deadlines can be pricy for small companies. A client that incurs fees is too busy or distracted to be doing payroll himself. It's time for someone else to take over: you! [Editor's Note: If you don't want to handle payroll chores yourself, consider recommending QuickBooks Assisted Payroll.]


4. Clients that are issuing many last-minute manual checks. This client's payroll solution could be OK, but they need some payroll consulting from you. Help them develop their payroll procedures to set limits with their employees and enforce timesheet deadlines.


5. Clients with many mistakes in their payroll. This client does not have the in-house expertise to be doing payroll. Let this client know they could be one hair away from legal action, and offer to help them clean up their act with training or outsourcing options.


6. Clients that are spending too much time on or paying too much for payroll. Offer to do a brief write-up of their options, just like the Geico insurance people give easy quotes, but stop there. Do a cost/benefit spreadsheet. Ask them to identify all the costs associated with doing payroll: staff time handling hiring paperwork, doing employee setup, collecting, entering, and correcting the time sheets, doing payroll each week, distributing paychecks, reconciling the payroll account, correcting errors, making tax deposits, filing quarterly returns, completing year-end returns and W-2s, and anything else. Multiply staff time by the hourly rate, and multiply this by 140 percent to account for benefits costs. Add in the costs of the forms, checks, and other supplies, and any other costs of completing payroll.
   
   Show the total to your client, and compare it to other payroll solutions. Would your client be better off with a new solution? The answer will be obvious once the spreadsheet is completed, and an apples-to-apples comparison of payroll options is laid side-by-side.
   
   The spreadsheet will also show opportunities for partial solutions; perhaps your client can save by implementing direct deposit, for example.

Time for Gift Giving

As you visit your clients between now and year-end, notice what category above they may fall into, and suggest a new payroll solution. Do this face-to-face, not in a letter. You've heard some of them complaining all through 2007; here's your chance to fix it! Be firm about the window of opportunity they have with year-end. Ask for a decision by an agreed-upon date that gives you both time to breathe.

Hopefully, you'll be able to make 2008 a very bright year for your clients' payroll solutions.

Sandi Smith, CPA, has authored three books, over 100 technology articles, and dozens of CPE courses for the accounting profession. She is a Dallas-based freelance writer and Web designer and can be reached at sandi@sandismith.com.

Last Updated: 11/12/2007