Build a payroll powerhouse in your accounting firm

minute read

Last Updated July 5, 2023


If you’ve ever thought: “Payroll isn’t for my firm”… at the time, you may very well have been right. The traditional payroll model that’s managed to linger over the years is cumbersome, complex, and downright frustrating. The good news: Ding, dong…the old model is dead.

Today’s payroll model is modern—automated, easy, and highly profitable. In short, that means less work and more revenue for firms. However, despite the advent of this new model, payroll remains a largely untapped revenue stream in the accounting profession. This is mainly due to a lack of awareness around cloud-based payroll solutions and services that make easy work of it.

If you’re not in the payroll game currently, you’re missing out on your part of this billion-dollar market. Additionally, firms that offer payroll services tend to be worth double compared to their tax and accounting practice counterparts. Yes. Double!

So, with all of this in mind, read on to learn more about the modern payroll model and how you can claim your share of this lucrative revenue stream.

The great payroll opportunity

Payroll isn’t the headache it used to be. Firms tend to shy away from payroll services, believing the technology is too complicated to learn and implement, processing is too intense, and that there’s no value in offering payroll services.

If you find yourself agreeing with these statements, we’re here to tell you that none of it is accurate. Cloud-based technologies make implementing and offering payroll easier than ever. As for value, payroll adds yet another layer of “stickiness” with clients— strengthening the client-advisor relationship and extending the client lifecycle (and associated revenue). Also consider all the value-add services that come with payroll: HR support, time tracking, workers’ compensation and retirement.

The great payroll opportunity sits before you. Those who want to snag their piece of the revenue pie need to act now…and this starts with choosing the right payroll model.

Choosing the right payroll model

There’s no “one size fits all” solution when it comes to payroll. Historically, firms had only two payroll options available: Outsourced or in-house. Outsourcing added no value to the firm, which also bore the responsibility of vetting the best vendor to handle payroll.

Handling payroll in-house meant all payroll processes were managed internally. Firms needed to purchase the right payroll software and manage all payroll tasks, including processing and printing checks, handling direct deposits, filing W-2’s and processing quarterly payroll taxes—just to name a few.

Today, there are three payroll models available. Let’s dive into each one…and then tell you why the hybrid model is the choice for modern firms.

payroll models

  1. Outsourced model. In this traditional model, a firm completely outsources payroll to a third-party vendor. While this is a hands-off option, it’s up to your firm to vet a trustworthy and established vendor that can handle sensitive payroll information and follow federal (and state) tax laws and regulations.
    Not having to worry about payroll might sound fantastic, but your firm completely misses out on the recurring revenue. In addition to lost revenue, when the time comes to sell your firm, you can’t take advantage of the rewards that come with having a highly valued payroll component.
  2. In-house model. Firms that use an in-house model handle all aspects of payroll directly, maintaining complete control of all payroll tasks. This includes processing and printing checks, handling direct deposits, filing W-2’s and processing quarterly payroll taxes.
    While the in-house model gives you complete control of payroll, it also comes with its own set of challenges. These include finding qualified payroll professionals, managing peak work times and human error. Despite the cons, however, your firm will likely be worth double based on having a payroll component in place.
  3. Hybrid model. The hybrid model represents the best of both worlds and is what Rootworks recommends. This model combines the outsourced and in-house approaches with a super boost in value that comes from using advanced, cloud-based technology. With applications like RUN Powered by ADP® Payroll for Partners (RUN), the advantages of the hybrid model are endless.
    Applications like RUN add valuable time back to your day with seamless, behind-the-scenes updates while keeping your firm current with multiple state and locality tax rules and regulations. With hybrid applications, gone are the days of tracking down complicated tax rules. This is all done for you—automatically.

Because the hybrid model supports the best of both outsourced and in-house worlds, it’s what we recommend. The platform does the work behind the scenes, while your firm remains the face of payroll processing. You focus on building the value of payroll for your firm while the complexities of payroll—multiple localities and state tax laws, tax returns, direct deposits, W-2 filings—are all managed behind the scenes.

Steps to get your payroll up and running

If you already offer payroll, start by conducting a thorough evaluation of your existing payroll strategy to identify inefficient processes and lack standardization. If you detect flaws, it may be time to change your payroll model to something far more modern.

For firms that don’t offer payroll (and for those that do but need a change), we’ve curated five steps to guide you in getting up and running with payroll.

  1. Choose the right payroll model for your firm. Before setting up payroll, you must choose which model to implement: Outsourced, in-house or hybrid. Whichever one you choose, keep in mind that each will require a bit of research.
    • Outsourced: Open your laptop and get your spreadsheets ready for research. You’ll need to review several vendors to find the best fit for your firm and your clients. While handing over payroll to another vendor sounds easy, you must be 100 percent confident in their ability to provide your clients with the same level of care and support that you do.
    • In-house: The in-house approach also requires you to do some homework. You’ll need to meticulously compare leading payroll solutions, plan for full implementation of the chosen solution, build a qualified payroll team to handle the work, and allocate human resource hours for system setup and ongoing payroll processing.
    • Hybrid: If you choose the hybrid model, you’ll need to identify the best vendor partner. Search criteria should include vendors that offer cloud-based solutions, complete with an accountant console and top-notch client support.
  2. Select the right vendor and technology. The payroll model you select dictates the vendor and technology support required. While outsourced and in-house models either move payroll completely outside the firm or totally inside the firm, payroll setup will happen while working with your vendor of choice.
    Because we recommend the hybrid model, the following points focus on items to consider when choosing a vendor partner.

    • Client experience must be top of mind when partnering with a vendor. Clients should experience on-demand access to technology, real-time data and communications exchange, and an intuitive interface. And it should be frictionless. Choose a system that streamlines the process end to end and provides a dynamic online and mobile experience. An app with direct deposit alerts and real-time access to pay stubs? Yes, please.
    • Client onboarding should be built into the solution you select. Don’t fall victim to unstructured and confusing onboarding. Instead, look for a vendor that offers a uniform process for bringing on new clients. Remember that the onboarding process filters into the client experience, so make sure the process is simple and all-digital.
    • An accountant console must be a requirement. Top solutions provide a comprehensive firm-facing dashboard that offers single sign-on to access client payroll, payroll reports, tax forms and other essential practice management tools. These solutions also offer additional tools such as salary calculators, access to state and local forms, and current wage and tax FAQs.
  3. Define your payroll product. Create a repeatable payroll service that is scalable and supports ease of growth with fewer staff members. Create a fixed fee for your payroll product that provides a monthly recurring revenue stream (there’s that stickiness again) and consider bundling payroll to support clients across the spectrum (i.e., standalone payroll processing vs. human capital management).
  4. Plan for growth. Before you market your new services from every channel available, start with your current client list. Identify those that need payroll services and begin marketing to them. Your existing clients already know and trust you so starting with them is the fastest way to grow your business.
    Once you’ve marketed to current clients, then move on to prospects. As more business comes in and clients successfully take advantage of your payroll services, they’ll be your biggest asset when it comes to referrals. Also, keep in mind that referrals don’t end with clients—attorneys, banks and vendors can also refer your services.
  5. Build a winning staff. Before entering the payroll arena, get the right people in your payroll corner. Hire individuals with payroll experience or seek candidates you can mentor into defined roles. To ensure your payroll staff is successful, provide the proper training upfront (they should be onboarded, too!) and get them into a community like the Rootworks payroll membership. Remember, they’ll be on the front line supporting your clients and offering a stellar experience, so give them the tools they need to succeed.

Tap into the payroll revenue stream

Payroll can seem intimidating, but don’t let this keep you from getting your piece of the payroll pie. Let the right cloud-based payroll platform take care of the repetitive payroll tasks and spend your time creating new service offerings and growing a payroll powerhouse.

For more information on how to launch a successful payroll services line, contact sales at

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