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Have you been thinking about offering payroll services in your firm, but you're not sure if you’re ready?
Or worse, you're worried you’ll make the leap and end up regretting it?
Adding payroll services to your accounting firm may seem like an obvious next step. Your clients keep asking for it, other firms are doing it, and the recurring revenue sounds pretty attractive.
But wanting to offer payroll and being ready to offer payroll profitably are two completely different conversations.
At Whirks, we’ve seen too many accounting firms jump into payroll services before they’ve built the processes, teams, or sales motions to support it. And the result is often stress, client churn, and lost profitability.
In this article, we'll walk through the seven biggest warning signs that your firm isn't quite ready to offer payroll services just yet. And we'll show you what needs to change before you take the leap so you can move forward and build a profitable payroll practice with confidence.
Sign #1: You're Planning to Use the Same Business Model for Payroll That You Use for Accounting
This probably isn't what you're expecting to hear, but the business model that works beautifully for your accounting services will probably fail in payroll.
Accounting work gives you flexibility. When a client pays you $1,500 or $2,000 a month, you have the margin to accommodate special requests, handle one-off situations, and provide that white-glove service that sets you apart.
Payroll is different. It operates on daily deadlines with zero margin for error. You need scalable, repeatable processes to deliver it efficiently. The problem is that most firms try to compete on price with traditional payroll providers while still offering that premium, highly customized service.
And unfortunately, that math doesn't work.
If you're charging standard market rates for payroll but promising accounting-level customization, you'll drain your profit margins dry. You need either a different service model or much higher pricing, and the market for premium-priced payroll services is pretty small.
What needs to change: Before adding payroll, define your service model clearly. Will you offer standardized processes at competitive rates? Or premium service at premium prices? You can't profitably do both.
Sign #2: You Expect Your Senior Accounting Staff to Handle Payroll
If your plan is to have your CPAs, EAs, or staff accountants manage payroll clients alongside their current workload, you need to pump the brakes.
That's a recipe for delivering lower-value work at a higher cost. Your senior accounting professionals are your most expensive resources. Having them process payroll means you're paying premium rates for routine work that doesn't require their expertise.
More importantly, payroll demands dedicated focus. Daily deadlines, 100% accuracy requirements, and zero room for failure create a different kind of pressure than monthly accounting cycles.
You really need at least two people dedicated to payroll. Not just one person trying to squeeze it in between tax returns. Two people create the redundancy you need when payroll absolutely cannot fail.
What needs to change: Be prepared to hire dedicated payroll staff before you launch this service. If you have an administrative person who can handle it, that's fine. Just don't assign this work to your higher-value accounting team.
Sign #3: You're Planning to Let Clients Dictate Your Payroll Processes
In accounting, customization is often a competitive advantage. In payroll, it's a profitability killer.
If you plan to let each client dictate your processes, systems, or even which software you use, your fees need to reflect that level of customization. And at those price points, you'll find very few buyers.
Profitable payroll services require you to set standards and stick to them. Sometimes that means saying "no" to client requests that you'd normally accommodate in your accounting practice.
Your budget should dictate what you're willing to do, not client preferences. If you can't draw that line in the sand, you're not ready.
What needs to change: Define your standard operating procedures before you bring on your first payroll client. Decide which software you'll use, what your processes will be, and where you'll make exceptions. Then communicate those standards clearly during the sales process.
Sign #4: You Haven't Established Clear, Written Growth Goals for Payroll
This might be the most important sign on the list.
You cannot succeed in payroll without a plan. The work is too routine, the margins too tight, and the competitive landscape too crowded to just figure it out as you go.
Before you add payroll services, you need written goals that answer questions like:
- What revenue do I expect in year one? Year three? Year five?
- How many clients will I need to hit those targets?
- What profit margins am I targeting?
- When will I break even on my initial investment?
- How many staff members will I need as I grow?
Without these benchmarks, it's too easy to drift. You might feel busy without actually being profitable. You might think you're succeeding when you're actually losing money.
If you're not growing in payroll, that's a serious problem. But you won't even know whether you're growing unless you've defined what growth looks like.
What needs to change: Create a detailed pro forma before you launch. Map out your expected revenue, expenses, and profit for at least the first three years. Set quarterly milestones so you can course-correct quickly if things go off track.
Sign #5: You Haven't Identified Someone to Champion Payroll in Your Firm Yet
Every successful payroll practice has one thing in common: someone who owns it.
This doesn't have to be a partner or senior manager. It could be an administrative team member with the right skill set and interest. But it needs to be someone formally identified and developed to lead your payroll operations.
Do not—and I cannot stress this enough—do not jump into payroll thinking you'll find the right person eventually. You need that champion identified before you launch.
What needs to change: Have an honest conversation with your team. Who has the aptitude for this work? Who wants to own it long-term? Invest in developing that person before you bring on your first client.
Sign #6: You Don't Really Want to Offer Payroll, But You Feel Pressured
Two kinds of pressure push accounting firms toward payroll, and both are terrible reasons to start.
- The first is client pressure. Yes, clients expect their accounting firm to handle payroll. But if you genuinely dislike everything about payroll work, don't force it. There are other ways to serve those clients without building a practice around something you hate.
- The second is peer pressure. Maybe other firm owners make it sound easy. Maybe you feel like you're supposed to offer payroll to be competitive. But adding a service line just because everyone else is doing it (without genuine commitment) is the worst possible foundation.
You have to want this. You have to see how it fits into your long-term vision. If you're not committed, you won't push through the challenges that inevitably come up.
What needs to change: Get honest with yourself. Do you actually want to build a payroll practice, or are you just responding to external pressure? If it's the latter, explore alternatives like partnering with a payroll provider instead of building this in-house.
Sign #7: You Don't Have a Payroll-Specific Outbound Sales Strategy
You may not realize this, but referrals will only take you so far in payroll.
Unlike accounting services, where your reputation and relationships can fill your pipeline, payroll requires a more proactive approach. You need an outbound sales motion—a deliberate strategy for finding and winning new business.
That could mean cold outreach, networking events, strategic partnerships, or marketing campaigns. It could mean targeting payroll-only clients or bundling payroll with accounting services for new business opportunities.
But if you're relying entirely on inbound leads and existing client referrals, you're not ready to build a sustainable payroll practice.
What needs to change: Develop a sales plan before you launch. How will you attract new payroll clients? What's your monthly activity goal? Who on your team will own business development? Answer these questions first.
From Warning Signs to Green Lights
If you recognized your firm in several of these warning signs, don't be discouraged. You're actually ahead of the game because you're asking the right questions before making a costly mistake.
At the end of the day, payroll isn’t something you can figure out on the fly. It requires a different business model, dedicated staffing, clear processes, and a proactive sales strategy. But when it’s done right, payroll can become one of the most profitable and stable revenue streams your firm ever builds.
So ask yourself:
- Have I mapped out my growth plan?
- Do I have the right people and systems in place?
- Am I launching this for the right reasons?
If not, that's okay. Now you know what needs to be addressed.
At Whirks, we've helped dozens of accounting firms through these same challenges. Our Network Partner Program was built specifically to help you avoid the common pitfalls and launch a payroll service that scales, profits, and relieves pressure.
Read "What to Expect in Your First 90 Days as a Whirks Partner" to see exactly how we help accounting firms add payroll the right way… with clarity, support, and structure.
When you add payroll at the right time and with the right preparation, it can become one of the most profitable and stable revenue streams your firm has ever built.
We’re here to help, when you’re ready.
