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The payroll space is becoming one of the most lucrative opportunities in the profession. This is largely due to changes in the payroll environment, new payroll processing technology, and the need for firms to offer more services to offset the commoditization of tax prep and other traditional compliance services.
New Environment
Increasingly complex government regulation is putting in-house payroll processing out of reach for many employers and contractors.
Many clients find that local payroll providers have a better understanding of their needs than the large national service providers.
Advances in workflow and technology have enabled many firms to increase productivity and offer additional services without taking on additional staff.
New Technology
Thanks largely to cloud-based software solutions, firms can now leverage professional-grade, production-oriented payroll software for a much smaller overall investment.
This reduced cost of entry enables many firms to turn a profit in their first year offering payroll.
Even smaller firms can now offer services that rival or surpass the big payroll providers, including remote printing, secure client portals, mobile time collection, and more.
Mobile technology and online portals that directly link small businesses and their employees to the accounting firm can streamline payroll processing for the firm—whether the processing is done by the firm, the client, or an outside payroll service.
New Opportunities
Offering a recurring service like payroll is a powerful way to improve client loyalty and build more productive relationships.
Payroll provides a consistent, year-round cash flow.
A payroll offering may attract clients who would not have considered your firm before.
A successful payroll service can significantly increase the value of your business should you decide to sell or transition in the future.
If you choose, you can position your payroll offering as a standalone brand, increasing your reach and opening new marketing opportunities.
Clients who initially use your firm for payroll are likely to buy additional services from you in the future and stay with you over the long term. In particular, having instant access to w-2 and other payroll information makes it easy for you to provide 1040 tax prep and other services to the employees of your client businesses.
What could payroll do for your firm?
Payroll isn't a one-size-fits-all business. There are many different ways to structure your payroll offering, from processing all payrolls in-house to referring them to an outside service, and many options in between. So it's important to think carefully about your goals. What does success look like for your firm?
Once you've determined where you want to go, we can help you get there by helping you refine your payroll solution to precisely fit your needs. You'll find a variety of helpful payroll strategy resources in our
Chart a Path section.