5 Key Challenges for Accountants Offering a Payroll Service
Many organisations expect their accountant to offer a payroll service as part of a wider portfolio of accounting services. But for accountants payroll processing is often an unprofitable service seen as a necessary evil to keep pace with competitors and there are significant challenges to overcome. Below is a list of our top five challenges that accountants face when offering a Payroll Service
1. Managing a Payroll Service Takes Time
A large part of the payroll service is data entry – transferring hours worked, pay rates and leave from internal systems or timesheets into the payroll system. Data entry is time-consuming, but an essential part of ensuring employees are paid accurately, presenting accountants with a difficult balance between paying their data-entry staff enough to ensure that those they employ will deliver a high degree of accuracy, and yet not so much that labour costs become prohibitive.
2. Accountants’ Payroll Services are often Unprofitable
The cost of delivering a payroll service is often underestimated, and for many accountants, it is seen as a low margin or cost-neutral service which allows a full portfolio of accounting services to be offered to clients. Employment costs are not the only outgoing to be considered. Specialist payroll software can be expensive to license and upgrade; regular changes to payroll legislation means that payroll staff need regular training and development; and general overheads associated with allocating office space (and the opportunity cost of not allocating this space to more profitable endeavours) can become expensive.
3. Maintaining a Payroll Service Requires Specialist Knowledge
Payroll legislation changes regularly, and the cost of not keeping abreast of these changes can be considerable, both in terms of financial penalties from regulatory authorities and retrospectively correcting payroll calculation errors. Many accountants will not have enough payroll work to make hiring an inhouse payroll specialist viable, nor will they want to invest in specialist software without the associated revenue to make this worthwhile. This increases the risk of error, which in turn could jeopardise the hard-won reputation of the whole accountancy practice.
4. Payroll Service Provision is Fraught with Risk
Without inhouse payroll specialists, regular employee training, and periodic payroll auditing, the risk of error is high. Payroll legislation and tax codes are subject to frequent change, and in the absence of a payroll expert, there is significant opportunity for important regulatory changes to be missed or implemented incorrectly. Without validation from a specialist, there is a very real chance that the accuracy of the calculations delivered by the payroll service could be compromised, jeopardising the relationship with the client (and any other accountancy work that you complete for them), and potentially the reputation of your accountancy practice.
5. Delivering a Payroll Service can Constitute a Conflict of Interest
Under the Code of Ethics for Professional Accountants (the Code) issued by the International Ethics Standards Board for Accountants (IESBA) and Articles 4 and 5 of the European Regulation 537/2014, auditors are excluded from providing payroll services to their clients because the threat to their independence is considered to be too great to be mitigated by any safeguards. As such, you should not provide a payroll option to those clients to whom you offer annual audit.
How our Payroll Service can Help
Whether you are dealing with Irish, UK or International payrolls, processing in-house can be a complex and time-consuming operation. Our award winning human resource and payroll service let’s your accountancy practice offer a discreet payroll outsourcing service as well as International HR services tailored specifically to our your needs.