Wilke and Associates has seen revenue increase by approximately 20 percent since joining Paychex's payroll recommender program, "Partnership for Success," two years ago.

"We don't want to get into payroll, but it's something all businesses need and want," says Mary Lou Hasson, a partner in the Carnegie, Pa.-based CPA firm. Instead of getting into the payroll business, the 12-person firm joined the PayChex program as a recommender. Hasson continues, "Referring works well because we deal with small businesses and start-ups that need tax services and payroll."
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The firm chose Paychex's program because it is "client-oriented." Paychex provides its accountants with several Paychex representatives. "Our Paychex contact comes into the office to meet with us one-on-one. This personal relationship is important and we pass it on to our clients. It helps the closure rate not to have a nameless, faceless partner," says Hasson.

Paychex refers clients to Wilke in the same way the firm refers clients to Paychex. Hasson estimates that the firm gives Paychex five referrals each month, and gets five a month in return.

"Our primary focus is to develop relationships with CPAs as gatekeepers. Clients look to their CPAs as their financial quarterbacks," says Rich Warshof, director of marketing and business development for Rochester, N.Y.-based Paychex.

Paychex is one of an increasing number of payroll processors that view accountants as gatekeepers to business, and who are willing to reward accountants who steer business their way. As a result, vendors such as Intuit, PayCycle, PayMaxx, SurePayroll, and Ceridian offer programs through which accountants can refer their clients to the vendors' payroll processing services.

There's little doubt that performing payroll services can produce results for accounting firms. Don Uhl, executive director, Accountant's Advanced Marketing Network, estimates that for every $1,000 of payroll business an accounting firm acquires, it directly increases accounting business by $3,000. But payroll vendors believe that CPAs fall into three categories: those who do payroll, those who refer payroll, and those who want nothing to do with it, like Hasson's firm. Still, the opportunities are huge. Industry observers estimate that 25 percent of small businesses outsource payroll.

Michael Alter, senior vice president of Skokie, Ill.-based SurePayroll.com says, "Small businesses are now looking hard at their accountants and they want to see what's out there, and having payroll options is now becoming more important. CPAs have a longer retention period with their clients if they are offering payroll options, it makes it harder for clients to switch."

Client Service

For firms that do not want to offer payroll services, recommender programs yield some of the benefits of doing-it-yourself. But accountants typically focus on client relationships, not on the amount of fees they might generate from referrals.

"The main reason to offer accountants payroll referral programs is not to make them money, but to allow them to fulfill customer demand," says Teresa McCarthy, business channel manager of Franklin, Tenn.-based PayMaxx.

Accountant/client relationships remain important in payroll. "We have found that approximately 40 percent of small businesses rely on accountants to manage at least some aspect of payroll," says Rene Lacerte, CEO of Palo Alto, Calif.-based PayCycle.

Lacerte says an accountant who signs up with PayCycle gets the best of both worlds. "Accountants can choose to refer clients to PayCycle or do as much or as little of their clients' payroll as they wish. In either case, they will be able to view all their clients' data from their accountant overview screen."

PayCycle's Web-based system lets CPAs manage all their clients from a single place. When a question arises, they receive unlimited toll-free support from the PayCycle team. "Small clients make more than their share of payroll mistakes, mistakes that often end up in the CPA's lap. If they can log into our secure Web site and enter correct hours, I guarantee accuracy," says Lacerte.

PayCycle also offers email reminders, a personalized to-do list, instant calculations, review and approval with printable pay stubs, paychecks, and free direct deposit. Prices start at $45 per month for five clients and range up to $129 per month for unlimited use. This includes an unlimited number of employees and payrolls, free direct deposit, and EFTPS. CPAs with at least one active client can use PayCycle to pay their own firm's employees at no charge.

Josh Peckler, a partner at San Francisco based Peckler, Evans, Kolling says that even though PayCycle does not pay referral fees, it is a program worth recommending. "Right now, I'm using PayCycle to run several of my clients' payrolls. I refer PayCycle because it is inexpensive for my clients. In the past I referred Paychex, but they are no longer a bargain provider. With PayCycle, the clients benefit and that's important, not the money I'd make for referring the program," says Peckler.

But Paychex also provides accountants with a suite of offerings under the company's program that are designed to free them to focus on more profitable aspects of their business. Although Paychex does not offer commissions, that does not seem to have affected business. Currently, one-third of business comes directly from CPA referrals. "Instead of referral fees, we provide products to make the CPAs more profitable and to enhance their business," says Warshof.

Paychex services include seminars that provide free continuing education credits. Seminars can include topics such as 401(k) options and unemployment issues. There is also an after-the-face payroll product exclusively offered to CPAs. Firms with at least 10 clients can get an Internet Report Service that provides information on a client's payroll going back four years. Meanwhile, the company's GL Interface enables payroll information to be downloaded into the CPA's accounting package.

PineBrook, N.J.-based Ceridian's CPA Program is similar to PayChex's. "For most CPAs, the major benefit of a referral program is that their clients receive a quality service at a reasonable cost. By finding a trusted partner to provide services such as payroll, the CPA can work with the small business owner on other services such as financial planning and growing their business," says Ed Ciszewski, the program's general manager.

Ceridian gives participants annual and quarterly tax returns that can be sent directly to the CPA's office for review weeks before filing deadlines. The accountant can view regularly scheduled payroll reports via a password-protected Internet site. Ceridian can also split the payroll output and deliver a portion to the CPA, other parts to the client, or produce copies for the CPA.

SurePayroll.com has two programs to assist accountants. Accountants who join the free referral program, called the Trusted Advisor Program, are assigned an account representative who will refer customers to the CPA. Accountants receive $25 per quarter for each of the first five referrals, $50 on each of the next five, and $75 on any additional referrals. Participants also receive a free listing on the SurePayroll Web site.

The company also recently announced a private-label program, the Custom Payroll Service for Accountants, which allows accountants to offer Web-based payroll services branded with their firm's name. SurePayroll has already signed up hundreds of accountants and by year's end, Alter hopes to have at least 500 enrolled.

"This new private-label program is perfect for accountants who do not currently offer clients payroll support, but who would like to," says Alter. "It's also beneficial for accountants who offer payroll support but who are frustrated with the headaches and inefficiencies inherent in their current payroll processes."

The Custom Payroll Service costs $249 for an annual licensing fee and is offered to accountants at the wholesale price of 10 percent below SurePayroll retail price. Year-end W2s or 1099s are priced at 10 percent below retail.

Those enrolled receive a customized application that clients can use to access and process their payroll and tax information. Clients can also be invoiced at a negotiated rate.

To run payroll, the Payroll Administrator logs into the Web site and updates and approves employee payroll information. SurePayroll calculates, deducts, pays and files all taxes. Like many processors, it guarantees clients will never pay IRS penalties. SurePayroll also handles direct deposit services. On payday, employees receive an email notice that they have been paid and can view their pay stubs on the Web site.

"For us, it's a question of providing good service to our clients," says Sheri Rosenthal, office manger of Calabasas, Calif.-based Allan Rosenthal and Associates, which uses the Custom Payroll Service. "We help our clients with consulting and tax work. We don't want to turn them away when they ask for help with payroll. This service has helped with client retention and it's helped us attract new clients as well."

After Rosenthal started using SurePayroll for its own payroll processing, the firm was so happy with the results it started referring the service to its clients. Rosenthal currently has 25 clients using the system.

"We were looking for a good Web-based solution for some time. We have used and evaluated many software packages, but there were always shortcomings in terms of workflow and access to data," she says. With the Custom Payroll Service, "What used to be a very time-consuming service offering for us is now very simple and profitable," she continues.

A little more than a year old, PayMaxx's referral program, CPA Select, currently has enrolled eight CPA firms who are recommending its PowerPay service. "Employers who process payroll manually, wrestle with costly and ever-changing tax issues, or are dissatisfied with their current vendors are prime candidates for our program," says McCarthy.

With CPA Select, CPAs receive PayView. This online system provides employee access to pay and deduction history, Internet reports, GL interface, certified CPE for professional development, and an alliance listing on the CPA Corner section of the PayMaxx Web site. In addition, PayMaxx pays from 10 to 20 percent of PayMaxx's gross payroll sales to referring accountants.

Mountain View, Calif.-based Intuit also feels providing its professional accountant customer with a variety of choices is the key to a strong payroll referral program.

The company's QuickBooks Payroll Services lets the accounting professional choose the level of participation from complete involvement including installation, set-up, training, and processing to a hands-off referral.

"With a hand-on approach, the accountant has an opportunity to add value and earn consulting income from their customer base, while hands-off allows them to focus on growing other areas of their practice. We can unload payroll from the accountant focused on other aspects of the practice or provide the tools to help accountants establish a profitable payroll service business of their own," says Philip Seagraves, group manager, channel marketing.

Membership in the QuickBooks Referral Program includes toll-free support for QuickBooks Deluxe Payroll and QuickBooks Premier Payroll, a QuickBooks Payroll Referral Kit with information about each service, a set-up checklist, price sheet, and CD with an overview of QuickBooks Payroll Service. The accounting professional can also choose between receiving either free set-up or 20 percent off the first year's monthly service fees. With the outsourced payroll services, incentives start at $100 per client and range upward, depending on how many clients the professional refers to Intuit.

by Carly Lombardo

July 2002

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SideBar1

Payroll Processors

Automatic Data Processing
Roseland, N.J.
(800) CALL-ADP
www.adp.com

Best Software
Reston, Va.
(800) 368-2405
www.bestsoftware.com

Ceridian
Pine Brook, N.J.
(800) 937-2996
www.ceridian.com

Intuit
Mountain View, Calif.
(800) 934-1040
www.intuit.com

Paychex
Rochester, N.Y.
(800) 322-7292
www.paychex.com

PayCycle
Palo Alto, Calif.
(866) Pay-Cycle
www.paycycle.com

PayMaxx
Franklin, Tenn.
(877) 729-6299
www.paymaxx.com

SurePayroll.com
Skokie, Ill.
(877) 954-SURE
www.surepayroll.com

SideBar2

Why Accountants Avoid Payroll

Many accountants reject payroll because of the headaches and inefficiencies in their current payroll processes.

According to Michael Alter, senior vice president of business development at Skokie, Ill.-based SurePayroll, accountants typically shy away from payroll for the following reasons:

-Getting payroll data from clients on a timely basis can be challenging and time-consuming.

-Once payroll data is received, there is the complexity of doing the payroll calculations. Tax tables for federal, state, and local government agencies and other withholding amounts change frequently and must be factored into the calculations.

-Making the tax deposits is an error-prone process. Accountants will typically remind clients to make tax deposits, but if clients forget to make the deposit or make a late deposit, penalties will result. The IRS estimates that 40 percent of small businesses incur an average payroll penalty of $845 every year.

-Accessing payroll data is problematic. When accountants or their clients use desktop software solutions to do payroll, it's difficult to access the data. If the data is at the accountant's office, the client has to ask for information from the accountant, which can be a time-consuming task.

-Generating and delivering checks is problematic. Historically, accountants could only offer direct deposit if they purchased expensive software or negotiated a relationship with a large bank.

-Preparing quarterly and year-end filings is a tedious undertaking for accountants.

SideBar3

CPA2Biz -- New Kid on the Block

CPA2Biz, the AICPA's product distributor, has gotten into the payroll process business, and is joining the trend towards offering CPAs the opportunity to earn commissions for referrals.

The program is being offered under the Rivio Advantage Referral Program. Rivio is the Internet-based company purchased earlier this year by CPA2Biz. The program is accessible at www.CPA2Biz.com/BusinessSolutions .

The program gives CPAs and their clients access to offline and online outsourced payroll applications. Processing services are powered by Mansfield, Mass.-based InterPay, a Rivio partner before its acquisition by CPA2Biz.

The services include printed paychecks and direct deposit, calculated employee pay totals and withholdings, simplified tax-filing, vacation and sick time reporting, payroll journals, and pre-tax plans.

"We wanted to involve CPAs with their clients and started simple with payroll, which can easily lead to other services. With the referral program, CPAs can access their clients' payroll data or even become the payroll administrator for their clients while leaving the 'heavy lifting' of payroll processing to Rivio and InterPay," says Wayne Harding, CPA, and senior director of channel development at CPA2Biz.

CPAs will be able to refer clients to a range of Rivio Business Services, including four currently available: Payroll Manager, Payroll Manager Online, Payroll Manager Office Edition, and Office Manager.

The program has no sign-up fees. There is, a free introductory period, and a one-year money-back guarantee for CPAs. CPAs can earn referral rewards, including free Rivio Business Services for their own use and products from the CPA2Biz store.

In addition, CPAs also can offer clients the service as a co-branded application on their Web sites. Prices are $1,000 for set up and a monthly subscription fee of $40. As of June, 100 firms had signed up and Harding expects the number to continue increasing by approximately 100 firms per 30 days.

Prior to teaming up with CPA2Biz, InterPay offered its own referral program, CPA Partnership Plus. With more than 300 CPAs involved in the program, InterPay's referral program allows firms to choose the type of rewards that would work best for their firm. Rewards include free payroll, charitable donations, client value packages, travel and merchandise points, and revenue sharing.

Officials from both InterPay and CPA2Biz are still working out whether the CPA Partnership Plus will remain a separate program or be rolled into the Rivio Advantage Referral Program.

CPA2Biz, the AICPA's product distributor, has gotten into the payroll process business, and is joining the trend towards offering CPAs the opportunity to earn commissions for referrals.

The program is being offered under the Rivio Advantage Referral Program. Rivio is the Internet-based company purchased earlier this year by CPA2Biz. The program is accessible at www.CPA2Biz.com/BusinessSolutions.

The program gives CPAs and their clients access to offline and online outsourced payroll applications. Processing services are powered by Mansfield, Mass.-based InterPay, a Rivio partner before its acquisition by CPA2Biz.

The services include printed paychecks and direct deposit, calculated employee pay totals and withholdings, simplified tax-filing, vacation and sick time reporting, payroll journals, and pre-tax plans.

"We wanted to involve CPAs with their clients and started simple with payroll, which can easily lead to other services. With the referral program, CPAs can access their clients' payroll data or even become the payroll administrator for their clients while leaving the 'heavy lifting' of payroll processing to Rivio and InterPay," says Wayne Harding, CPA, and senior director of channel development at CPA2Biz.

CPAs will be able to refer clients to a range of Rivio Business Services, including four currently available: Payroll Manager, Payroll Manager Online, Payroll Manager Office Edition, and Office Manager.

The program has no sign-up fees. There is, a free introductory period, and a one-year money-back guarantee for CPAs. CPAs can earn referral rewards, including free Rivio Business Services for their own use and products from the CPA2Biz store.

In addition, CPAs also can offer clients the service as a co-branded application on their Web sites. Prices are $1,000 for set up and a monthly subscription fee of $40. As of June, 100 firms had signed up and Harding expects the number to continue increasing by approximately 100 firms per 30 days.

Prior to teaming up with CPA2Biz, InterPay offered its own referral program, CPA Partnership Plus. With more than 300 CPAs involved in the program, InterPay's referral program allows firms to choose the type of rewards that would work best for their firm. Rewards include free payroll, charitable donations, client value packages, travel and merchandise points, and revenue sharing.

Officials from both InterPay and CPA2Biz are still working out whether the CPA Partnership Plus will remain a separate program or be rolled into the Rivio Advantage Referral Program.

Copyright © 2002. Accounting Technology.