Is Payroll and bookkeeping work profitable?

just wondering how many of you, percentage wise take on payroll and bookkeeping work and is it worth it? I'm considering expanding my tax practice a little bit and taking on this type of work. for example if a client is paying adp $5,000 per year for payroll filings and they would give me the work instead is it worth it or more of a headache? thanks!

While I may be in the minority, I eliminated payroll over 8 years ago. Don't want to be tied up processing payroll when Paychex can do it for $100 to $200 a month. Same with bookkeeping. I'd rather be golfing , out where the clients are.

There's two different questions here.

(1) Is payroll and bookkeeping work profitable? Yes. Your revenues from this line should exceed your expenses.
(2) Is it worth it? That's a much bigger question.

Payroll needs to be done during tax season. If you don't have someone in your firm to do payroll work, you'll be the one doing it. If you do have someone in your firm to do the work, then they can't be supporting your tax season in other ways.

Personally, I will only do after-the-fact payroll (i.e. quarterly reports) to support a business client. They do their weekly payroll in QB; I worry about the tax filings. It's the higher value add.

I discontinued payroll as it was not profitable and too aggravating

I offer payroll and bookkeeping services. It's been a great tool in attracting small business clients that don't want the non-personal nature of the big payroll companies. Andy many of them like that they can receive all three core services in one office.

I do find payroll profitable. The fees we earn from just our payroll service covers my payroll costs for all of my staff (there are 3) with quite a bit left over. We've been offering payroll for many years, so we have enough volume to have full-time staff doing the work.

The key is to have at least one person dedicated to working the payroll department, because it is labor-intensive and time-sensitive. You should not do this yourself, because you will be tied to your desk. Payroll services can't take a day off to go golfing.

all these replies make sense. thank you

I offer payroll and bookkeeping services. It's been a great tool in attracting small business clients that don't want the non-personal nature of the big payroll companies. Andy many of them like that they can receive all three core services in one office.

I do find payroll profitable. The fees we earn from just our payroll service covers my payroll costs for all of my staff (there are 3) with quite a bit left over. We've been offering payroll for many years, so we have enough volume to have full-time staff doing the work.

The key is to have at least one person dedicated to working the payroll department, because it is labor-intensive and time-sensitive. You should not do this yourself, because you will be tied to your desk. Payroll services can't take a day off to go golfing.

Love it!! But truth be told, from 4/16 to 12/31 I leave my office at 11AM on Thursday and don't return until Monday.

I offer payroll and bookkeeping services. It's been a great tool in attracting small business clients that don't want the non-personal nature of the big payroll companies. Andy many of them like that they can receive all three core services in one office.

I do find payroll profitable. The fees we earn from just our payroll service covers my payroll costs for all of my staff (there are 3) with quite a bit left over. We've been offering payroll for many years, so we have enough volume to have full-time staff doing the work.

The key is to have at least one person dedicated to working the payroll department, because it is labor-intensive and time-sensitive. You should not do this yourself, because you will be tied to your desk. Payroll services can't take a day off to go golfing.

This is why payroll did not work for me. My clients had a lot of employees with multiple child support orders and wage garnishment and they complained if I charged more. They also thought it was cute to read the W-4 information for me to take dictation and then accuse me of not trusting them because I wanted the form faxed. And I would get after hours call on the day before payday with payroll hours, new employee, and complain that I wasn't at my desk. Or my favorite, call me payday morning with the hours. Trying to take the weekend off wasn't possible. I would even get calls on Saturday because either the client misplaced the payroll documents and his employee lost his check and he wanted to know the net so he can just write a check. I am so relieved to be rid of it and the client is paying twice what I charged to ADP.

While I may be in the minority, I eliminated payroll over 8 years ago. Don't want to be tied up processing payroll when Paychex can do it for $100 to $200 a month. Same with bookkeeping. I'd rather be golfing , out where the clients are.

SP - have you ever played Bald Head Country Club (Private 800-Members) Bald Head Island, Southport, NC (South of Wilmington)?
I'm the 1992 Men's Club Champion (36-holes - back tees, 73 + 72 += 145) on a windy weekend.
Where did you win your 1st Club Championship?

I had a payroll processing business, set it up as a separate entity, had awesome/expensive software to do it efficiently. I just had trouble finding good staff. It can be profitable but with upstarts like Gusto, why? The smaller clients will pick Gusto or Intuit, and the bigger ones will need/want the bells and whistles ADP offers.

I am considering offering bookkeeping again through staff I will use for that. I want to focus on tax and business coaching. After cutting back some clients and dumping my unproductive staff after tax season last summer, I realized how incredibly lucrative tax work can be. No way I want to be tied down doing bookkeeping. But offering it as service to clients and having my staff do it while I do the tax and coaching? That's a model I like.

Unless you have reliable staff year round that can act without you having to look over their shoulders all the time don't do it! That's all I will say after having personal experience of the nightmares when you are on vacation or away from the office and "all hell breaks loose"

While I may be in the minority, I eliminated payroll over 8 years ago. Don't want to be tied up processing payroll when Paychex can do it for $100 to $200 a month. Same with bookkeeping. I'd rather be golfing , out where the clients are.

SP - have you ever played Bald Head Country Club (Private 800-Members) Bald Head Island, Southport, NC (South of Wilmington)?
I'm the 1992 Men's Club Champion (36-holes - back tees, 73 + 72 += 145) on a windy weekend.
Where did you win your 1st Club Championship?

Im the bar champion at my club....

I don't see how a CPA can compete with the payroll service companies and frankly they are better equipped to handle things like out of state payroll, etc. Too much of a pain and researching payroll issues that I couldn't charge for. Right now I do one live monthly payroll on QB, and about 6 or 7 after the fact quarter/annual payroll reports. The one monthly payroll I do I made it clear that if I am not at the offense it will be delayed until I am.

We only do bookkeeping for clients for whom we do the tax work. Usually all done at yearend for the return on QB. A few interims that we do compilation reports for. This is all after the fact.

While I may be in the minority, I eliminated payroll over 8 years ago. Don't want to be tied up processing payroll when Paychex can do it for $100 to $200 a month. Same with bookkeeping. I'd rather be golfing , out where the clients are.

SP - have you ever played Bald Head Country Club (Private 800-Members) Bald Head Island, Southport, NC (South of Wilmington)?
I'm the 1992 Men's Club Champion (36-holes - back tees, 73 + 72 += 145) on a windy weekend.
Where did you win your 1st Club Championship?

Im the bar champion at my club....

Charlotte Country Club?
Quail Hollow Club?
Myers Park CC?
Carmel CC?
Club at Longview?
That's where the big money is.

I have not read through all responses, but here are my thoughts. For a CPA or experienced accountant, payroll should be avoided at all costs. I only do it as a courtesy for other clients that pay me a lot in fees each year. Otherwise, I will not take it on. Also, if I do take on payroll, it is going to be based on my terms, not the clients, and I charge high fees for it. In other words, if you are on a weekly or semi-weekly schedule and want me to do payroll, you are changing it to semi-monthly so all payrolls I do can be done at same time. It bogs you down. If you are struggling, fine, take it on, but many of us simply do not want payroll because it is too burdensome and a headache, overall.

As for bookkeeping, different story. It can be very profitable, but for me, it is not high enough level work. I want to help advance small businesses to achieve their objectives. I take on bookkeeping when it is worthwhile from a fee standpoint, and there is other high-value work attached to it. Otherwise, I avoid it because there are entirely too many incompetent bookkeepers or rather competent bookkeepers (that do not understand their real value) charging $25-40/hr and I am not going to charge anywhere close to that. I have a part-time bookkeeper and the billing rate is MUCH higher.

I have a handful of payroll clients. All are small closely held businesses that have less than 7 employees and all are tax clients with some bookkeeping as well. Clients like the fact they can contact me to process payments and adjustments, ask questions, etc. My cut-off is more than 7 employee's, seasonal part-time, etc. In terms of rates I just increased mine dramatically. The services tied to the payroll kept increasing, garnishments, retirement set-up, etc., which take up a considerable amount of time along with all the other pay increases, changing payroll laws, reporting requirements, and so on. I did have one client recently balk at a fee increase due to garnishment processing. She wasn't really commenting on what I was charging just wanted to know if she could legally pass the cost on to the subcontractor (wasn't an employee). I looked up the law in MD and found she could charge him $1 - hey I don't make the rules and I must be compensated for my time.

A related service I have decided I will not do is training clients how to run their own payroll. Now that is a real headache that isn't worth the money. If they want to do it themselves they don't want to pay enough for the training to make it worth my time and aggravation. And 90% of the time they do it incorrectly and come back with questions they do not want to pay for the time it takes to respond and teach them all over again.

I wish I could eliminate payroll or find a competent person to run for me at least some of the time. It does tie you down and I think there are other more value added services I could replace it with. The issue is the steady cash flow. Auto debit payment at the beginning of the month is the only form of payment I accept. And all clients are direct deposit. No paper checks.