Payroll is one of the most vexing parts of bookkeeping. This is because the rules keep changing and there are many parts to understand. Some brave souls tackle it head-on and master the beast. Others think the software programs will do it all for them. Many shy away from the whole process and turn it over to either an in-house employee or out-source to a payroll processing company.
What’s best? Depends on you. In today’s world, if you are a small business, I wonder why anyone would try to do the whole thing in-house. As I mention in the latest article posted on this blog, “Journalizing Payroll“, the large payroll processing firms such as ADP and Paychecks lack flexibility and their reports are hard to read. Somehow you have to get the payroll information they are providing into your books, so you have to decifer their reports. That’s what my article is about.
Are there any alternatives? There are small payroll processing companies that are flexible. They are fine for small payrolls. If you have cafeteria plans, pension plans, and other plans, sometimes those complexities are too much for the smaller payroll firms.
Recently I have been hearing about a new concept, (To be honest, I haven’t tried this out and don’t know anybody who has, but it seems like a idea worth investigating.) but I believe it is restricted to accountants and bookkeepers. Accountant’s World (http://www.accountantsworld.com) and a few others and suggesting that they will process your payroll clients in partnership with you. You enter the employee hours through their Internet site and they do everything else, including reports and checks. They claim that you do 20% of the work and receive 80% of the profit. This frees you up to take on more payroll clients or do other accounting work. Most important it allows you to retain your own payroll clients. .
I had a payroll business as part of my accounting practice for twenty years. I never made any money from the payroll but it provided important side benefits. First, I was able to design the payroll reports so they fit nicely into the client’s journal entry process. Second, there was consistent, and constant contact with the client that always helps cement the relationship. And, third, the clients love to have one firm do all their work, such as payroll, financial statements, and tax returns. It was a good deal for them and also for me. Clients are more likely to stay loyal when all their needs are being serviced by one firm.
So check out the payroll article and let me know if you have any questions or comments.
John
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