If there’s any small silver lining to rising costs, it’s inflation or higher fees can motivate change. It might take higher restaurant prices for someone to finally learn how to cook. A struggling client would look to their CPA to rework their budget in a way that can sustain long-term growth. And Quickbooks pricing increases are tipping many CPAs toward payroll process changes.
Intuit changed rates for a range of Quickbooks products in 2022 and 2023, making it more expensive for users to continue running payroll in-house. The recent Quickbooks pricing changes include higher rates for Desktop products and ProAdvisor bundles and an increase in the per-employee fee for lower-tier payroll plans, to $5 per month per employee. Many Quickbooks wholesale plans have moved to a new pricing structure/subscription model as of January 2023.
Realistically, the Quickbooks pricing increases might not be a huge burden for small CPA firms. Desktop and ProAdvisor bundles cost a few hundred dollars more this year. Paying an extra dollar per employee for monthly payroll processing could be manageable in a firm with few employees. But paying more for payroll services, on top of the risks and challenges of running payroll in-house, might be the tipping point that gets CPAs thinking about whether it’s time to make some necessary changes.
Pros of Keeping Payroll In-House
Maintaining control of the payroll process might feel like the most secure way to handle sensitive data related to employees, clients and the firm itself. CPAs by nature have to be diligent about protecting sensitive financial data and limiting access to it. Keeping all your payroll data within your own team’s control reduces the risk of an external security breach. (That said, outsourcing payroll could mean your data is even safer since payroll services use multiple layers of protection to encrypt and secure client payroll data.)
Even with Quickbooks pricing increases, the monthly out of pocket cost to process your own payroll might be cheaper than the monthly cost of outsourcing.
In-house payroll gives you a good deal of flexibility around timing and workflow. The payroll person can run the process however and whenever works for your firm, and can make last-minute updates or changes without having to rush to track down someone at their payroll provider for help.
Cons of Keeping Payroll In-House
- Mistakes and payroll liabilities are your responsibility alone. It falls on you to remit all appropriate taxes and submit all appropriate forms and payments to federal, state and local agencies. Even CPAs who are pros at providing financial planning and tax strategy for their clients aren’t necessarily payroll execution experts themselves. Meeting all your payroll obligations is complicated, and gets more complicated when the team grows and/or employees work in multiple jurisdictions. Without any oversight from payroll professionals, errors and oversights can go unnoticed…until the IRS gets in touch. Penalties related to mistakes you make on your own payroll are your responsibility to pay. And there are going to be some unhappy people in the office if their paychecks aren’t correct.
- Maintaining compliance requires you to stay current with changing payroll and HR regulations. Every year brings new changes to laws that affect payroll, like higher state minimum wage rates and new paid family leave laws that are funded with payroll taxes. You can’t meet your current payroll obligations if you aren’t clear about what they are. Keeping track of all those shifting regulations in all the jurisdictions where your firm and employees work will probably take hours and hours of research every year.
- Staff: Running payroll in-house might rely on the continued presence of a specific employee. The HR person or office manager might be an expert at your firm’s payroll after years of managing it every week, but what happens if that person leaves suddenly? Or, if you run payroll personally, what would happen if you were seriously injured and out of work for weeks? Because payroll is so complex, running it in-house requires someone with institutional knowledge. Mistakes are bound to happen if someone else has to step in and take over a process they’re not prepared to manage.
- Integrating with benefit systems can be complicated for in-house payroll. If the payroll system doesn’t integrate benefits seamlessly, it falls to the payroll person to track and update information across multiple applications. Human error can lead to things like employees taking PTO without that time being deducted from their PTO bank.
- Timing: Running payroll in-house is hugely time-consuming in a variety of ways. In addition to the paid time someone spends getting payroll ready each week, quarterly and year-end reporting take extra time. In a system that still uses paper forms, time is wasted by chasing people down to get them to submit those forms. And it takes additional time to enter the information from those forms into the payroll system, to verify that everything’s accurate and correct any errors. Maintaining the payroll application, learning how to navigate new updates to the software and securely managing all your in-house payroll data are other time costs. In busy firms, allocating all of those on-the-clock hours for someone to deal with payroll isn’t an efficient use of time or money.
The decision to keep payroll in-house or outsource to a payroll service requires weighing a lot of different factors. CPAs could potentially spare themselves a great deal of expenses, time, stress, and liability by leaning on payroll professionals to process payroll correctly and answer all the complicated questions that can come up around things like multi-state taxation and employee classification.
ConnectPay partners with CPAs to make payroll easier for their clients, but our payroll solutions make life easier for CPAs too. If higher Quickbooks pricing has you looking for more cost-efficient ways to manage payroll—or if you’re just ready to take payroll off your own plate - let’s connect!
by Paul Altavena
Paul Altavena is the co-founder and President of ConnectPay. He currently leads the Mergers and Acquisitions team as part of the company’s strategy to accelerate growth. Paul’s background in payroll started in the late 1970s and includes participation in building a recognized public payroll company based in Upstate New York. His entrepreneurial spirit continues to fuel a passion for the payroll business and he is a recognized leader in a quickly changing industry.