Whether you're a solo CPA or one of many at a large accounting firm, offering employee payroll services to clients can represent a significant boost to your bottom line.
It can also present significant challenges.
Not only do you need to ensure that all of your clients' employees are paid accurately and on time, but there's also the matter of making sure the government gets their correct cut too—something that's often easier said than done. The IRS estimates 40 percent of small to midsize businesses (SMBs) end up paying a payroll penalty each year due to an incorrect filing.
With so much on the line, having the right payroll software is crucial. But which system is best suited to meet your specific needs as an accountant?
This Buyer's Guide aims to provide some guidance. Below, you'll find information about payroll software functionality, pricing and more to help in your software search.
Click a link below to jump to that section:
What Is Payroll Software for Accountants?
Common Functionality Found in Payroll Software for Accountants
Benefits of Payroll Software for Accountants
How Much Does Payroll Software Cost?
Payroll software for accountants allows CPAs to manage worker wage information, calculate amounts for employee compensation and withheld taxes, do payroll runs, generate reports and more. Many popular payroll software systems cater to both internal accountants and outsourced accounting firms.
An example payroll run in QuickBooks Full Service Payroll
Payroll software offers accountants a secure digital environment to automate processes, set reminders and manage a vast amount of payroll data over time.
Browsing through payroll vendor websites can quickly become overwhelming if you're not sure what you're looking for. To help, here are some common functions you can expect to find in most systems:
|Employee management||Track individual employee pay rates (hourly or salaried), withholding information for benefits and paid time off (PTO).|
|Time tracking||Input hours worked, or pull them from an integrated time and attendance system, to calculate correct wages.|
|Run payroll||Set a payment period (biweekly, monthly etc.) and calculate the total payroll cost for that period.|
|Payroll allocation||Deposit owed payroll amounts to workers in their preferred form (direct deposit, check printing or pay card).|
|Tax management||Calculate correct amounts for local, state and federal payroll taxes and file automatically.|
|Accounting integration||Automatically log payroll amounts in the company ledger through integrated accounting software.|
|Reporting||Generate standardized reports detailing organizational payroll costs.|
There can be small differences in features within these functions between products. For example, some products offer multistate or even multicountry payroll, while others don't. Another example is some payroll platforms can generate W-2s and 1099s for workers come tax time.
One increasingly popular feature is an employee self-service portal where workers can log in to do things such as update their bank accounts or download past pay stubs themselves. This article highlights a few benefits of implementing self-service features.
In a 2015 report, Software Advice learned that one in every five payroll software buyers still relies on manual methods such as spreadsheets or pen and paper to handle their payroll needs. If you fall into this group, it's time for an upgrade.
Here are some benefits that dedicated payroll software can bring over manual methods:
How much you pay for a payroll software system is going to largely depend on two factors: the breadth of functionality in your system of choice and the number of employees you're doing payroll for. The more advanced the system is and the more employees you need to manage, the greater the cost.
Because most systems are cloud-based (meaning the software is hosted by the vendor on their own servers for you to access via a web browser), payroll software is almost always sold through subscription licensing. In other words, you should expect to pay a flat fee every month, every year or every pay period to use the software.
Software license prices can range from as little as $10/month for one employee all the way up to $3,500/month for 250 employees or more.
Download our payroll software pricing guide to learn specific cost information for popular systems such as Gusto, Xero and QuickBooks.
We've covered the basics, but there are still a number of factors to consider when deciding which payroll system is right for you or your firm. Here are some last things to keep in mind during your search:
Our service is simple and 100% free to customers like you because software vendors pay us when we connect them with quality leads. You save time and get great advice. Vendors get great referrals. It's a win for everyone!