Blog Post

Three Top Mistakes Made by New Payroll Companies and How to Avoid Them


A 2018 survey by Accounting Today showed that more than half – 56 percent – of small accounting firms nationwide offer payroll services and another 10 percent plan to add them. Some 65 percent of medium-sized firms and 69 percent of large firms also do payroll, with 13 percent and six percent, respectively, planning to add those services. And with good reason. The North American payroll and human resources market value surpassed $7 billion last year and is expected to continue growing at a rapid pace.

But the payroll business can be a complex one and mistakes can be costly, both financially and in terms of a firm’s reputation. If you’ve recently launched or are considering starting a new payroll firm, make sure you’re aware of these three top common mistakes:

  1. Using multiple software systems: You’ve undoubtedly heard the adage about “too many cooks in the kitchen”. That’s just what comes to mind when firms choose multiple software programs and platforms to complete tasks that a single solution could handle far more effectively and efficiently. Today’s more advanced solutions are designed to fully integrate a range of payroll and related processes including timekeeping, tax, ACA, reporting and communication. The benefits are plenty. One recent survey showed that smart firms can save an average 60 percent on software subscription fees when they switch from separate solutions to a single suite. And studies show that firms that automate and integrate payroll, benefits administration, absence and leave and compliance reporting are seven percent less likely to have payroll errors and 36 percent more likely to report improved employee productivity.


  1. Failure to comply: In a recent survey of businesses that outsourced their payroll, 40 percent of all respondents listed peace of mind about regulatory demands as a top reason. That figure jumped to 63 percent for companies with 20 to 99 employees. This means lots of opportunity for new and growing payroll firms. It also means a great deal of risk and responsibility to make sure that all payroll-related compliance laws and regulations, which vary greatly from place to place and change often, are followed precisely. Taxes alone can prove a potential financial quagmire. Failure to collect withholdings and remit a single local, state or federal tax payment on time can bring stiff penalties ranging between two and 15 percent.


  1. Failure to adapt: Paper checks and even direct deposit increasingly are going the way of the cassette tape in some markets and among certain demographics. Today’s payroll clients and their ever-savvier employees, particularly those of the burgeoning Millennial generation, have thoroughly modern expectations. Examples are 100-percent paperless payroll systems that utilize debit cards, saving materials costs for employers and bank fees for employees; 24-7, online access to payroll and HR information for both managers and employees; role-based security; and easy data conversion and general ledger integration for clients.


If you’re a new or growing payroll provider, Apex HCM offers suite of fully customizable software and service solutions designed with integration, automation and efficiency in mind. Let us help you build your business and set you apart from your competitors. Call 877-750-2739 or request a demo online.