Shawn Bradley 
Here’s a question for you.
What’s the single biggest pain point for accountants these days?
If you guessed payroll errors, you’re right on the money. They’re one of the most frustrating, costly, and time-consuming aspects of the accounting profession today.
In fact, the average business experiences a 1.2% payroll error rate every pay period. 1.2% doesn’t sound like a lot, but if you’re a firm with 100 employees each making $900 per week, that 1.2% comes out to a total of $56,647 in losses per year.
No one wants that!
Worse still, 40% of small businesses get penalized by the IRS each year for payroll errors. Fines, not warnings. Money going out of your pocket unnecessarily, because of mistakes that could have been avoided.
Thankfully, there is a solution.
With professional accounting software, the error rate can be reduced by 31%. You also save hundreds of hours per year of data entry, tax research, and manual processing. The key is using the right software and following the most effective implementation process.
Let’s dive right in!
We’ll Cover:
- The Real Price Of Manual Payroll Processing
- Why Accountants Payroll Software Drastically Improves Accuracy
- Essential Features For Maximum Impact
- Implementation Best Practices
The Real Price Of Manual Payroll Processing
Manual payroll? Yeah, that’s a bad idea.
It’s really not much of a surprise considering accountants processing payroll manually are generally using paper forms, calculators, spreadsheets, and various tax tables and publications.
For every field that needs to be filled out, and every calculation that must be performed, there is a chance for human error.
When it comes to handling payroll manually, accountants have to manage:
- Wage calculations
- Tax withholding amounts
- Benefit deductions
- Overtime rates
- Compliance rules and rates
…and all these pieces have to be correct. If just one line is off on one paycheck, it can snowball quickly, multiplying into bigger and bigger problems.
The harsh reality is manual processing also negatively impacts employees, which can be the biggest expense of all.
Statistics show after experiencing just two payroll errors, 50% of employees will start looking for a new job. Employees that churn because of payroll mistakes can take a serious bite out of your firm’s bottom line.
Manual Processing Devours Time And Money
If there’s one group that doesn’t have a lot of extra time on their hands, it’s accounting professionals.
Yet for many accountants, payroll eats up a significant amount of time. On average, 35% of an HR team’s time is spent processing payroll.
Small business owners spend a whopping four hours and 53 minutes every pay period processing payroll taxes alone. That’s 20.8 days per year spent on just tax calculations and compliance.
Why Accountants Payroll Software Drastically Improves Accuracy
Enter accountants payroll software.
Professional-grade payroll software completely changes the payroll landscape. The most effective systems remove the majority of human intervention from the payroll process, making it both faster and more accurate.
Firms that automate their payroll are 33% more efficient than firms that don’t. Plus, they’re more accurate, which can help you and your clients avoid costly penalties and mistakes.
Accountants payroll software directly addresses some of the most common errors that can occur during processing:
- Incorrect tax calculations
- Deductions not applied correctly
- Data entry mistakes
- Compliance errors
- Filing deadline errors
To make things even better, these systems also include automatic updates for tax rates and compliance as laws and requirements change.
Accountants are no longer forced to become overnight experts on tax law changes and shifts in tax brackets to keep payroll accurate.
Real-Time Calculations Mean Maximum Accuracy
Clients don’t expect you to get payroll wrong.
They want it done accurately, every single month, with no deviations. When it comes to payroll accuracy, most firms see a lot of success with accountants payroll software.
Payroll automation lets you process real-time validations and catch errors before they can become an issue. Are you using the wrong tax rate? The system flags the mistake. Is there duplicate data? It will be noted. Missing information? The processing won’t complete until it is all there.
Consistently error-free payroll helps you build trust with clients and reduces churn.
Essential Features For Maximum Impact
Not all payroll systems are made the same, nor do all feature the same capabilities.
Software that’s designed specifically for accountants to manage their clients’ payroll, in the most efficient and accurate way possible, will have certain features that are must-haves.
Key features to look for include:
Automated Tax Filing And Compliance Features
If a software solution can’t handle federal, state, and local tax calculations, filing returns, and making payments on time automatically, without your intervention, it’s not the right one for you.
Tax mistakes are among the most common payroll error types. In fact, 33% of employers make payroll mistakes each year, which costs U.S. businesses billions. Most of these errors relate to miscalculated taxes and/or missed filing deadlines.
Tax features should include automatic calculations, rate updates, direct deposit tax filings, and automatic payments.
Multi-Client Management
Accountants generally manage payroll for more than one client at a time.
Good payroll software allows you to manage multiple businesses all in one platform. You can easily move between different accounts with their unique pay schedules, tax requirements, and benefit deductions without mixing up data.
Features that make this work include separate dashboards for each client, multiple client data silos, bulk processing functions, and client-specific reporting.
Integrates Seamlessly With Your Accounting System
Payroll software that integrates directly with QuickBooks, Xero, or other accounting systems is ideal.
Accounting systems and payroll processing go hand in hand. QuickBooks allows your accounting systems to post payroll expenses to the general ledger. Payroll tax obligations update as they are incurred, so your books stay accurate across all your financial software.
Systems that do this with direct integrations provide the most seamless payroll experience, with less chance for error and double-entry.
Employee Self-Service Portal
Software with an employee self-service portal takes the burden of data collection and form filling off of your team.
Employees can update their address, change direct deposit information, request and download tax forms, and more without having to contact you or manually provide you the data.
Self-service features reduce the number of interruptions and cut down on the time your team spends doing data entry and admin work, while also receiving data directly from the source.
Implementation Ideal Practices
Installing a new payroll system in your firm is easy.
Effective use and implementation, though, that’s where most firms come up short.
Implementation process should be approached in a strategic, deliberate, and efficient way.
Always start slow. Begin with one client as a test case. Start small and work out any wrinkles with one client with payroll requirements before expanding to all clients.
The entire team should be fully trained on any software that they will use to process payroll. Training should not be a simple demo, but hands-on use of the software.
Data Migration
Moving your data into a new system is one of the most critical steps in the onboarding process. Take your time with it. Make sure that all employee information, tax rates, year-to-date totals, and other payroll information transfer over correctly.
Do a parallel run for at least one pay period to ensure accuracy before fully committing. Back up your data prior to migrating.
Automated Alerts
Set up automated alerts to warn you about common payroll issues. Unusual payroll amounts, missing employee data, tax deadlines approaching, direct deposit failures, and compliance changes can all be included as alerts in your system.
Alerts allow you to catch problems and mistakes before they become big issues.
Wrapping Up The Payroll Puzzle
Payroll errors are among the most common issues that accountants experience with their clients. They’re frustrating, time-consuming, and they’re bleeding your firm money.
Operating in an old school, manual processing way is no longer a viable strategy for most accountants. The error rate is too high, the fines and penalties too much, and client satisfaction too important.
Payroll software offers a much-needed solution. With the right software and effective implementation practices, the error rate in payroll processing will fall by 31%. Your firm will also save many hours of manual data entry, research, and tax filings.
To get started with accountants payroll: assess your current error rate, research and select the right software to fit your needs, onboard a pilot client, train your team, and monitor and refine.
