“You deserve a break today.” That’s pretty much what Concannon,
Miller & Co. is telling its approximately 700 McDonald’s clients
when pitching its new online payroll services.
The Allentown, Pa.-based accounting practice has been building up a
“McDonald’s niche” over the last several years, providing individual
outlets nationwide with write-up, tax, and financial reporting
services. Last year, the firm joined forces with A D Computer,
headquartered in Center Valley, Pa., to provide the latter’s WebPay
payroll processing and related tax filing services to interested
clients. So far, 20 restaurants have signed on, “But we see this
growing—and it is growing,” says shareholder John Sharkey, CPA.
The reasons for this growth are several. For one, there’s WebPay’s
versatility within the restaurant niche. It can easily handle tips,
as well as different pay rates for the same employee functioning in
more than one capacity. For another reason, there’s price. Sharkey
says that processing a 50-employee McDonald’s payroll, which would
include Concannon, Miller’s collecting and reviewing all the
pertinent data, would run about $111. If the store reviews its own
data, which lets Concannon expedite it over to A D, the fee can drop
to as low as $62.
Then there’s the ease-of-use factor. Each restaurant’s point-of-sale
system can post all the relevant time and pay-rate data to
Concannon’s own system, where it can be scrutinized before being
forwarded to A D. If there appears to be an error—e.g., a Social
Security number doesn’t match up with a name—Concannon’s computer
will generate a diagnostic report. “With the exception of taking a
look at the diagnostics, we’re pretty much hands off,” says Sharkey.
A D cuts the checks and handles the payroll taxes.
WebPay, however, clearly lets Sharkey and his colleagues function
better as financial advisors. “Since it’s Web-based, we have access
to all the payroll reports,” so the firm has a keener insight into
overhead expenses. Also, WebPay can automatically post the collected
payroll data to each client’s general ledger, making it that much
easier for the practice to produce comprehensive financial
Sharkey reports, “We’re able to generate a profit. It’s not a big
profit, but this is something we needed to do to be competitive in
our niche.” And Concannon, Miller has become more competitive.
“We’re attracting more clients because we have this service,” says
Solidifying the Client Relationship
Nor is this just a niche strategy. It’s an approach that every
accounting firm needs to consider, in Sharkey’s view. “By having the
payroll service in-house, it’s additional glue for keeping that
customer,” he says. “They’ll think twice before moving that
This goes a long way toward explaining why more and more CPA
practices are branching into online payroll services. It also
explains why payroll heavyweights such as ADP and Paychex are
embracing the Web, along with relative startups, such as PayCycle
and SurePayroll, and more established firms like A D Computer and
In fact, Rochester, N.Y.-based Paychex has joined forces with the
AICPA to offer its Online Payroll service to accountants and their
clients via the AICPA Business Solutions Partner Program. The
average cost for handling a weekly payroll of 10 employees is
With Paychex Online, the Internet is used to enter payroll,
calculate what-if scenarios, change employees’ records, and
calculate an employee’s net pay to write a manual check. Additional
services include direct deposit, as well as payroll tax filings,
deposits, and reports.
Optional capabilities—designed to strengthen client loyalty—include
the General Ledger Reporting Service, which allows automatic posting
of payroll data directly to many of the most popular accounting
software packages. There’s also an Internet Report Service, which
provides 24-hour access to up to four years of data in over 35
different reports. Both services are free for CPAs.
By participating in the AICPA program, payroll customers get one
month of free processing service and a six-month, money-back
Randy Reichstein, a Houston-based CPA, has made a specialty of doing
tax and write-up work for dental practices. He tried “a little bit”
doing payroll on his own, but quickly determined that there had to
be a better way. He hooked up with Paychex via the AICPA program.
Now, “Paychex has been like my payroll department. They have freed
me up to work with other dental offices.”
The bulk of his clients subscribe to Paychex Online Payroll. While
the vendor itself actually processes the payroll, Reichstein
routinely reviews the semi-monthly reports and ensures the tax data
is accurate. Since “most of my clients use QuickBooks,” he’s able to
take advantage of the GL Reporting Service to post the downloaded
payroll data to their respective accounts.
He also regularly uses the Internet Report Service. If a business
owner has a question about withholdings, for example, “I tell him to
give me Internet access so that I can download the reports [that I
need] and work at home. That way, I can go out and take more
business” during regular work hours, notes Reichstein.
“More business” is likely to include related human resource
services. Reichstein is looking at helping his clients move their
employee handbooks online and adding employee self-service
capability for administering 401(k) and Section 125 benefit plans.
After all, referring to Paychex, he says, “They’re able to bring a
lot more to the table than print a paycheck.”
Meanwhile, for companies with up to 49 employees, Parsippany,
N.J.-based ADP Emerging Business Services Division offers EasyPayNet,
a Web-based payroll processing and tax-filing solution. Users can
create and print customized personnel reports, access electronic
versions of reports on the same day that ADP processes the payroll,
print payroll checks and vouchers directly from a laser printer, and
view and print pay stub information for a specific check or period
Designated users, including accountants, can access payroll reports
and data via the Internet regardless of the payroll input method
that is used.
For a 10-person company processing payroll biweekly, cost is
approximately $30. However, for accountants interested in using
EasyPayNet to serve several clients, custom pricing is available.
Bob Fortino, CPA, a principal with S.D. Daniels & Co. in New York
City, notes that the firm has been intricately involved with
clients’ payroll processes for at least 15 years. “The reason is
pretty straightforward” in Fortino’s opinion. “Many of our clients
insisted that we handle it for them,” because of privacy concerns
and in the belief that their financial advisor should review all
their business transactions, he reports.
“Of course, we can do it ourselves, but we’re really not set up to
do it profitably,” he says. But there never was any question that
the firm would accommodate its clients’ wishes. Enter ADP and, more
recently, its EasyPayNet service.
“It helps us offer a valuable service to clients who are focused on
their own businesses and are of a size that they can’t afford to
have a payroll person in-house,” says Fortino. What’s more, the
online service is a “much more cost-effective” way to handle payroll
since a profit margin can be built into the retainer fee. The
overall result is that “it helps us retain clients and to offer
From Fortino’s perspective, “The convenience of time and place is
important. There’s a lot of flexibility as to when I can review the
data, whether at 10 at night or at six in the morning.” Also, “I can
get online reports in a couple of hours” following a payroll run. He
also give high marks to ADP for support. “They assign a client
representative who walks you through step-by-step setting it up and
[processing] your first payroll.”
EasyPayNet also has the requisite flexibility. Most of S.D. Daniels’
smaller business clients are “pretty consistent” in their biweekly
or semi-monthly payroll runs. But then there’s a client that has
several bonus runs each year, and also needs to have ADP calculate
its employees’ 401(k) contributions. “The EasyPayNet system handles
that pretty well,” notes Fortino.
Collecting and reviewing the payroll data, cutting checks, and
making the required tax filings add up to a heavy commitment in time
and resources. “That’s not something I would want to do on my own,”
says Fortino. However, as a result of the ADP online alliance,
“We’ve got some very good revenue from payroll service and are
looking to grow it.”
Offering Clients Relief
As part of its Accountant’s Office Online suite of services,
Hauppauge, N.Y.-based AccountantsWorld offers Payroll Relief AC.
Pricing starts at $5.95 for a weekly payroll ($9.95 for a biweekly
run) of up to five employees, plus $1 per additional employee. The
accountant may charge what he or she wishes, and may private label
The all-inclusive service fee encompasses payroll processing,
printing of paychecks, direct deposit, signature-ready quarterly and
yearly federal and state forms, and electronic payment of federal
and state taxes.
With more than 500 business clients, “We’ve always done payroll tax
returns,” says Alan Singletary, CPA, a shareholder with Haney & Co.
in Downers Grove, Ill., outside Chicago. However, starting the first
of this year, the company signed on with Payroll Relief AC. “This is
our first foray into actually handling the paychecks,” he reports.
“This was an easy decision for us,” because Haney enlisted it at the
urging of a major client, which owns a nationwide network of TV and
radio stations. “This instantly turned into 19 payroll clients. We
had a nice kick-start to get this going,” says Singletary.
Haney & Co. receives the payroll data from the various stations,
reviews it to ensure the deductions and garnishments are correct,
and then prints the checks as well as whatever reports are
requested. “We package that all up and send it off to the client’s
main office,” where the checks are dispersed to each station.
The CPA firm of Michael J. Knight & Co., based in Fairfield, Conn.,
used to encourage its business clients to outsource their payroll.
However, “it seems that a lot of the payroll providers out there
aren’t meeting the needs of small and medium-size businesses,” says
area director Ryan Sheppard. So the firm last summer broke out a
specialized unit, Insight Payroll Services, which is a Payroll
Relief AC subscriber.
The unit has 15 payroll clients now, “but we’re in the process of
adding another six or seven a quarter,” says Sheppard. “There’s
definitely a need out there.”
With its Web-based direct deposit and electronic tax payments,
Payroll Relief “takes a lot of the work out of our hands,” notes
Sheppard. It’s designed to accommodate “very much a variety” of
payroll frequencies: weekly, biweekly, and twice monthly. Also, its
online deployment means “we can access payroll data when on-site
with a client” for a speedier, more thorough review of their
In short, by subscribing to an online payroll service, “we can
better service our clients’ needs with a minimum amount of time.”
He’s sure it will become a profit generator as well as a substantial
On the startup front, PayCycle and SurePayroll have been making
waves with their online services. Strictly targeted to small
businesses with fewer than 50 employees, PayCycle provides online,
dual accountant/client access. Clients can create paychecks and then
have the CPA make any necessary withholding adjustments in real time
before the paychecks are printed. Direct deposit; electronic
payments and filings; integration with leading accounting packages
such as QuickBooks, Quicken, and Microsoft Money; and support are
included in the flat $10-per-client monthly fee that the CPA is
charged, regardless of the number of payroll runs or number of
employees. Accountants may charge their clients whatever they choose
for this service.
PayCycle, with headquarters in Palo Alto, Calif., allows the
accountant to have real-time access to all client data from an
Overview screen. The service supports various pay frequencies for
salaried and hourly employees, including up to two hourly pay rates
for the same employee. A variety of reports lets the accountant view
payroll data from different angles. For example, Payroll Details
provides wage, tax, and deduction totals for a selected period,
whereas Total Pay Report breaks out earnings by pay type such as
bonuses, commissions, and overtime.
By using PayCycle, Indianapolis-based Schuff & Associates is able to
offer payroll processing services to businesses across the country,
with support via phone, fax, Web conferencing, e-mail, and express
Founder Sheryl Schuff, a CPA, has about 20 clients on PayCycle.
“It’s easy to use, and the pricing structure was extremely
attractive,” she notes. She has also been impressed by her ability
to download payroll data into a client’s QuickBooks package, “no
matter what version they’re on.” Schuff typically charges $50 a
month for a client with five or fewer employees; $60 a month for
businesses with six to 10 employees. There are also set-up fees.
For a client that issues paychecks on Friday, she usually receives
their data by the preceding Tuesday and initiates the run late
Wednesday night. “It’s all pretty simple,” says Schuff. She
anticipates that, as the payroll part of her practice grows, “it
will be easy for me to staff, which will allow me to grow my
practice even faster.”
For those that don’t want to get actively involved in processing but
still want access to their clients’ payroll data, PayCycle offers a
Client Retail Service. This allows the CPA to sign up clients, who
will receive payroll services directly from PayCycle. The vendor
will bill these firms, with fees starting at $19.99 a month.
Targeted to businesses with fewer than 100 employees, the
SurePayroll.com service encompasses direct deposit, all tax filings,
quarterly returns, toll-free support, and employee self-service
functionality. A real-time preview feature allows the business owner
to review the payroll data prior to approval. Standard pricing for
the service is $29.95 per biweekly or semi-monthly payroll, plus
$1.25 per employee transaction. Accountants can take advantage of a
specialized Custom Payroll Service for CPAs, which allows them to
provide a branded payroll service with their own pricing schedule.
Cincinnati-based W. Bernard Kyles & Co., a financial management
consultantcy, used to recommend that its clients outsource their
payroll services because it had determined that payroll processing
was a “thankless job”—literally. “As long as it was correct, nobody
ever said ‘thank you,’ recalls principal Kyles. “But let it be a
problem and all heck broke loose.”
That situation has changed because of an alliance between Kyles and
Skokie, Ill.-based SurePayroll. “They made the labor-intensive job
of payroll easy and cost-effective to our firm as well as to our
clients,” reports Kyles.
Payroll service may not be a big revenue generator in its own right,
but it is profitable and, no less important according to Kyle, who
adds “it always leads to more profitable and knowledge-based work.”