Payroll is not for the faint of heart. It is literally the lifeblood of most businesses, allowing them to pay their teams and yet is one of the more complicated, compliance-driven and stressful areas of most businesses. While some clients are extremely knowledgeable, others rely on their accounting professional for questions ranging from how to process a bonus check to information on where to go for benefits. As accounting professionals, we are often expected to know all the rules and regulations, handle all inquiries with immediate answers, and accommodate how the client wants to do things in spite of all those rules and regulations. Many accounting professionals don’t want to do payroll, but yet are often drawn into helping our clients with it because we KNOW the mess it will be to clean up and how vital it is to get right.
There are many options out there for payroll processing, and many are really good. Many are not. Some have innovated well, and others feel like they are just one step above the system I started out with 30+ years ago. So when I hear that another update has been added to QuickBooks Online, I am intrigued. I have not always been the biggest fan of QuickBooks Online Payroll – but over the past couple of years, I continue to get excited as I have seen the product continue to improve by leaps and bounds. We are putting more and more clients on the tool, and we and our clients are loving it. One update happened recently that continues to reaffirm our enthusiasm in how Intuit is developing software that meets the needs of our team and clients.
QuickBooks Online Payroll now automatically debits all payroll taxes when payroll is processed, and remits the payments to the agencies. (This is an opt-in feature for clients who want to auto-file and pay their taxes.) Previously when a payroll was run in QuickBooks Online Payroll, only the taxes that were due immediately were withdrawn from the client’s bank account, and then later another debit to the account happened when the quarterly or annual taxes were paid.
This update was an adjustment for many clients at first, but cash flow has been greatly simplified- what a business owes for that payroll is collected immediately by QBO Payroll, no matter when it will get paid to the tax authority. This streamlines the cash flow, and makes the entire process smoother for clients. They no longer have to worry about whether there will be additional funds needed for payroll down the road. Most clients no longer even have payroll liability accounts with balances on their balance sheets, which is actually better for us as their accounting professionals, as we have less accounts to reconcile each month, quarter or year.
Now I understand the hesitation that some accounting firms, and even some clients, have had with this change in process. It does mean that at the time of running our payroll the clients cash flow is an even bigger consideration in many situations. And yes, it does actually mean that Intuit is going to be holding funds throughout the year. But knowing the issues that I have seen with my own clients and my colleagues’ clients where payroll taxes are due, and the client has not kept that cash on hand, that becomes a big issue and one that nobody wants to tackle. Additionally, as we think more and more about the automation of processes that are very predictable and very standard, there is not much value in managing all the ins and outs of the liability accounts and managing the cash balances for clients for these tax liabilities. We can focus on more important things, and so can our clients.
I am able to focus on more valuable insights for my clients like how much it costs to bring on a new employee, or analyzing their revenue or expenses based on headcount, or whether they can afford additional benefits to help with staff retention. These are the conversations that our team is finding ourselves in more and more as we utilize QuickBooks Online Payroll to handle the compliance side of payroll. We are really able to focus on areas of the client’s business where our analytical minds and understanding of the client and their business meet. We can help our clients allocate payroll to jobs and truly understand the profitability of a project without maintaining extra spreadsheets. We can explain the new Department of Labor ruling about contractors vs employees and help them make informed decisions.
What QuickBooks Online Payroll does by automating the tax payment process is allow us to focus on the much more valuable and meaningful conversations that our clients are really looking for. We can collaborate and bill our clients for the knowledge and insight that we can provide. So check it out, and let me know how YOU are going to collaborate with your clients!
