How to Manage Payroll for Your Accounting Clients

If you are an accounting professional looking to expand your services and offer payroll to your clients, there is no time like the present. Since you are already taking care of your client’s finances, it makes sense to bundle in payroll services to support more areas of your clients’ business.

Should you start offering payroll services to your existing and new clients, you will need to know what exactly goes into payroll management, including what further information you will need to gather and the steps you can take to get started.

Want to offer payroll to your clients? These topics will help you understand more about offering payroll services to your clients: 

What Role Does Payroll Play in my Accounting Firm?

Since a business’s payroll deals with finances, it is an essential part of the accounting process. Whether or not you currently offer payroll services, you will still be using this data for accounting and tax purposes. For that reason, it makes sense to run payroll for your small business clients as you are already handling this information when managing your clients’ books.

If you decide to market payroll services to your accounting and bookkeeping clients then you need to understand how to manage their payroll duties properly.

Questions to Ask Your Clients When Offering Payroll Services

When consulting with your current clients about adding payroll services, you will first want to understand their current payroll processes. Consider compiling a set of questions to ask them to determine the best way to transition their payroll from in-house to your business.

We’ve put together a list of questions to ask your small business clients before taking over this responsibility:

  • How are you currently managing your payroll?
  • How long does it take you to conduct payroll each pay period?
  • What is your payroll frequency?
  • Have there been any issues surrounding payroll errors in the past, and if so, how did you rectify them?
  • How difficult is it to collect the needed data, including employee timesheets, for your payroll processes?
  • How much do your payroll services currently cost you?
  • Are you confident in your payroll management?
  • What kind of support are you looking for in regards to handling payroll?

Take detailed notes when consulting with your clients to ensure you have the information to tailor your payroll management processes to their specific needs. Then, with the necessary information in hand, you can begin bundling your accounting and payroll services together.

Client Payroll Management in 8 Steps

Once your clients agree to bundle their payroll processing into your current accounting or bookkeeping service, you will need to create your own process.

Use the following payroll tips laid out in eight steps to help you outline your plan of action going forward.

1. Determine if your clients need full-service payroll solutions (including tax payments and filing)

The first step in managing your client’s payroll is determining what services they want from you. For example, certain clients might decide to use your accounting practice to process their payroll, pay their employees, and generate payroll reports while they take care of their CRA remittances and payroll taxes. Others might choose to have you cover the entire process, from start to finish, including submitting their remittances and taxes to the CRA and making third-party payments to RRSPs and group insurances.

It is more than likely that if you provide tax filing services to your clients, they will opt for full-service payroll solutions, as you already file their employer taxes through the CRA on their behalf. Adding payroll tax forms alongside their income returns will make your filing more efficient. Asking your clients about the level of service they are looking for should be part of your consultation, included in the list of questions focusing on their current processes.

2. Create separate client accounts in your firm’s payroll software

Once you know what payroll duties you will cover for each of your clients, you will need to keep all their data in one place, separated from the rest of your clients. These individual client accounts will make it easier to run payroll and manage other advisory services your various clients might use.

If you use accounting and payroll software, then you will already have various client profiles in place to easily manage multiple clients at one time. Adding payroll data to these individual accounts should be your next focus.

3. Gather the necessary documents and information from clients

To process your clients’ payrolls, you must have specific business and employee information at your disposal. Before you start running payroll, it is a good idea to create a checklist of all the necessary documents you need to collect from your clients.

Using the list below, you can create your own checklist to ensure the collection and data entry of all needed payroll information of these small business owners and their employee records, including:

  • The client’s business number
  • All employee data, including each worker’s Social Insurance Number, hourly or salaried wage rate, any bonuses, current address and contact information, tax filing status, bank account details, and TD1 personal tax credits return
  • Timesheet data for each pay period
  • List of employee benefits, such as CPP contributions, health benefits, and life insurance for deductions and remittances, including written documentation of any approved additional deductions employees are making for RRSPs and other  supplementary benefits
  • The business’s GST / HST number from the CRA
  • The business’s CRA payroll program account information

4. Sync any software, including time tracking software

When receiving the necessary information from your clients, they can share data electronically, which you will have to upload into your software, or you can sync their tools with your own software. One of the most significant advantages of using payroll software is the ability to synchronize data between applications, including any time tracking software your clients use to track employee timesheets.

Quality accounting and payroll software can easily sync with time tracking software to make the accounting and payroll process more efficient. This is especially handy for PTO tracking and any other paid leave or time off of employees.

Syncing data across the tools can save you time, money, and effort every month, as you won’t need to ask clients to send you what you need constantly. Online payroll is made easier when you use cloud-based software to sync data automatically in one place.

5. Set up direct deposits with clients and their employees

Part of the accounting and payroll service you are providing to your clients will include paying their employees. You will need to set up direct deposits with all of your clients employees to pay them for their work correctly. This entails finding a direct deposit provider. Generally, businesses can set up direct deposits through their business bank account or direct deposit through the payroll software itself.

All of the employee information you collected from the client will be used at this time to connect your accounts to the employees’ bank accounts. These bank account details should include each employee’s:

  • Bank account number
  • Bank account type
  • The bank’s name
  • The bank’s routing number

With these accounts connected, you can now complete direct deposits to these employees following the client’s pay schedule.

6. Calculate pay and make deductions and remittances

As a trained accountant, you should already be quite familiar with payroll accounting and journal entries, as well as the necessary payroll deductions and remittances. That being said, it’s always a good idea to brush up on this knowledge to ensure all deductions are made correctly. You should also familiarize yourself with the Canadian overtime rules to ensure all government laws and regulations are followed.

You will need to keep a detailed record of the various benefits and pension contributions your small business clients are making as employers, as well as the employee contributions themselves. This includes all CPP contributions, employment insurance (EI), and supplementary benefits such as health insurance, life insurance, pension plans, and of course, payroll taxes.

It is important to note that you will also need to include any further contributions the client’s employees are opting into regarding supplementary benefits, such as RRSP contributions. Typically, they will provide written confirmation of these contributions- as only some employees might make these larger contributions compared to other employees that might only use the government-mandated pension plan.

Once you understand all deductions needed per client and employee, you can calculate each individual’s gross pay and make the necessary adjustments.

7. Conduct payroll reconciliation to ensure client info is correct

After completing all payroll calculations, it is always advantageous to conduct a payroll reconciliation before processing client payrolls. A payroll reconciliation ensures the payroll records and general ledger entries balance out per client account. Reconciling the two helps to eliminate errors and guarantees all employees are accurately paid for their work.

This step will help decrease errors in payment before they become an issue. Otherwise, rectifying payment mistakes after the money has been deposited into employee accounts can negatively impact the client’s business, their employee relations, and your own relationship with your clients. Therefore, you should always reconcile client payroll accounts before signing off on employee payments.

8. Update and maintain client payroll records

Each time you successfully process client payroll, you will want to update your records to reflect the most current pay periods. Maintaining payroll records is an essential duty for accounting firms, and as a payroll accountant, since you’ll need this data come tax season when you file your clients’ employer taxes or personal income returns. In addition, your clients will need complete records should the CRA decide to audit their business.

By using QuickBooks payroll software to manage your client’s books and payroll, all of their data can be found in one place, and it syncs in real-time, making it easy to keep an expert eye on your clients’ finances. Thanks to this automation and centralized data, you can streamline your workload and ensure fewer errors in the calculations. Learn more about the benefits of using QuickBooks Payroll to manage your clients payroll.

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