#TechTips: Payroll Can Feel Like Surgery, But Good Payroll Is A No Brainer

By Jonathan Rivlin

Payroll.  Just the word alone can make any accountant cringe.  Except for rookies fresh out of school.  So innocent.  So naive.  I would hope this is no longer the case, but your humble Tech Tips never had any exposure to payroll, or sales tax for that matter, in school.  For something so intrinsic to our society, it’s not well covered in academia.

Early in my career, I learned the finer points of payroll in an apprentice-like manner.  Ever the technologist, I built my first payroll “module” in Excel ’95.  As that old School House Rock song went, “Mother necessity” was my muse.  Or laziness.  I got tired of typing – yes, actually typing on a typewriter all the various paystubs for our client’s employees.  So, I figured out how to create this in Excel.  And, using a dot matrix tractor style continuous feed printer (yes, they still make and sell these), my run of paystubs would look some what professional.

By the end of the 90’s, we had referred most of our payroll work out to the 8000 pound gorilla, ADPaychex.  Their company reps would “make the rounds” delivering US Master Tax Guide round about December and a basket of junk food in early April.  How lovely of them.

This arrangement never sat well with Tech Tips.  Noting that these firms started as smaller CPA firms that once did tax work, the question always loomed in the back of my mind:  What’s keeping them from resuming their tax practices on top of their payroll side?  And yet, it really was a matter of economics.  The clients couldn’t be trusted to do their own payroll; the stakes were just too high, and small firms just couldn’t devote the resources to make this time sensitive operation profitable.

We kept a few payroll projects for long time clients but refused any new payroll engagements – for a time.

And then, we took on a new client as a close referral whose CPA (that we’d be replacing) was farther ahead of us on the cloud tech implementation curve.  She had setup bank feeds (Oh so promissing, and yet so disappointing) in the client’s QB Desktop file and created a cloud based payroll practice.  One of the ADPaychex firms (remaining “nameless” for this post) had created a wholesale part of their web based payroll system.  We could sign on as an accounting partner and then onboard our clients as we saw fit.

This was 2012 and it seemed like a win.  Though the system was clunky and annoying to use, once it was setup and the learning curve attained, we were able to offer payroll under our own firm’s umbrella without having to deal with filings or tax deposits.

Payroll then, was the part of the industry that got us into the cloud; we just didn’t have the presence of mind to think of it that way back then.  Think about this; this was only 5.5 years ago, but things really have changed that much in this short a time.

Things went along; we added some more clients to the platform.  And then, it went bad – operatically bad.  This part of the story will be visited in another post; want to keep this particular post focused on payroll solutions.  But suffice to say, this story touches on so many challenges that we face:  managing clients, managing technology, setting expectations, not getting sued…

To say that ADPaychex screwed up is an understatement.  The client left the practice, my stomach almost ate a whole through itself, and our malpractice carrier took things up to 11.  As an accountant, I strive to be accountable; and I don’t mean to come across as if I’m shirking that responsibility, but in going over this issue (over and over) in my head; we really did everything we could to prevent this slow rolling train wreck of a dumpster fire.

The client wanted to cancel a payroll.  We called our dedicated rep at ADPaychex.  Cancellation confirmed – and double checked.  Of course the payroll went through as if we hadn’t cancelled it.  The client freaked and called their bank and told them to block the transaction.  I received frantic text messages.  I called my dedicated rep to find out what was going on.  “Nothing; there’s no payroll today sir.”  Clearly the large beast of this particular national payroll processor wasn’t setup properly for the cloud.  It goes on and on, like a case of poison ivy…that got infected…that turned gangrenous.

I would have loved to have gotten rid of all the payroll work after that “incident.”  But the reality is that we practitioners need to offer this service.

So we looked at options.  I even created a beefed up version of my earlier payroll module in Excel (’16 this time) – was preparing to go full manual.  Then we found a company called Gusto.

Like Xero, and Bill.com, and Futrli, and all, this company has a clean easy to use interface.  There are trainings (though nothing counting towards CPE), an accounting partners program, a dedicated rep, fanatic customer support, and the pricing structure is transparent and lower cost than the national players.

We transitioned our clients off of the other platform and onto Gusto in short order – they provided special tech support for this.  They even included a free account for our firm’s payroll.

Getting ADPaychex to stop charging us has been another frustration…

Setup on Gusto is simple; the employee (and contractor) gets invited to create their own profile on Gusto and they complete their own W-4 and I-9 through the site.  Gusto makes employee onboarding effortless.  They handle paystub delivery, direct deposit, eFiling returns, tax payments, and they address any notices.  They offer discounts once a certain level of clients are put on the platform.

Gusto syncs with Xero (and QBO).  You can map the various payroll elements to specific accounts and tracking categories (and QB classes).  Every time you run a payroll, it automatically appears in Xero.  When the payroll transactions clear the bank, reconciliation is a breeze. 

Now we have to take off the rose colored glasses.  Gusto is great; it’s the way of the future.  But there are a few cons to be aware of.  Gusto only prepares direct deposit paychecks.  If you want to cut a paper check, you need to prepare that net check manually – one could use Bill.com to deliver the check.  (Gusto will still prepare and deliver the paystub and send the payroll tax electronically.)

Also, and this shouldn’t be the deal killer you may think it is, Gusto has a 4 business day lead time.  Meaning that if you have a paydate on a Friday, you need to submit it by Monday.  After 90 days, some businesses can qualify for a 2 day lead time.

I’ll admit that ADPaychex wins on this one count with a 1 day lead time, but for us anyway, making the change was worth it.  And forcing the client to stay on top of their payroll info (hours worked, any new hires/terminations, bonuses, etc) to meet the earlier timeframe has actually helped in other areas of accounting practice.  It’s like putting the client on notice to keep their payroll records in a certain way by a certain time filtered into other parts of their business.

On those occassions where we had questions, Gusto tech support was available, almost instantly, and worked to manage our issue until resolution.  They offer live chat through their website, email, and phone support.

We occassionally still get sales calls from our old ADPaychex reps.  After choking on my rage, I politely decline “my current complementary edition of the US Master Tax Guide” (You do know that stuff’s available on the internet now, right?) 

We’ll be onboarding two more clients to Gusto over the next few months.  Costs less, easier to use, better support, syncs to the cloud, and they offer other HR solutions.  It’s a no brainer.

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Thanks, and catch you next time!