Read this article to learn the actual yearly revenues that can be earned while doing your Payroll business.
Possible Yearly Revenue
Possible Yearly Revenue
By offering payroll, an accounting firm not only provides a much needed service that produces substantial profits, and opens up to businesses all the other profitable services that the firm provides. Now we’ll review some real examples based on asking, and getting, two times the yearly gross.

Average Yearly Fees for All Clients = $1,500

 # of Payroll Clients

Avg. Yearly Fees for These Clients 

 Immediate Sales of These Clients

 100

 $150,000

 $300,000

 200

 $300,000

 $600,000

 400

 $600,000

 $1,200,000


Transforming this great phenomenon is strictly business – smart business. Set up the payroll part of your business as a separate legal and tax entity, as a separate business from your accounting business. Another important thing is that you operate your payroll business as a cash business—no collections or bad debts. Simply cut your firm’s check at the same time that you do their payroll. When calculating the cash flow of the payroll business, some payroll accounts will be weekly, bi-weekly, or even monthly, depending on what your business payroll clients need. In the following example, we’ll use weekly payroll and/or monthly payment cash flow.

Average Yearly Fees for All Clients = $1,500

 # of Payroll Clients

Avg. Yearly Fees for These Clients 

 Weekly Payment Cash Flow

Monthly Payment Cash Flow 

 100

 $150,000

 $2,884

 $12,500

 200

 $300,000

 $5,769

 $25,000

 400

 $600,000

 $11,538

 $50,000

Additionally, you’ll have certain opportunities with payroll clients who want other services. One very commonly used service would be a year-end archival service. This service takes years of your client’s records and transfers them to a single CD. Business clients love this because of its simplicity and conciseness of the actual records. The average fee can be $75 to $125 for one year of archival CD records sent to the client. The reality of this is that more than 85% of the clients will gladly take this service as a yearend benefit for themselves. In billings, the payroll client is sent the records either on a CD or via an e-mail. Within 10 days, their billing is automatically deducted from their account and electronically put into your payroll business account.

Yearly Billings at $75 for Year-End Archival Services
(80% of client base agrees to this service)
• 100 Clients: Additional fee paid to you in January = $6,000
• 200 Clients: Additional fee paid to you in January = $12,000
• 400 Clients: Additional fee paid to you in January = $24,000

Other possible additional fees might be New Year file creation, custom reports such as 401K reports, set-up for garnishments, etc. The bottom line is that you have a group of users for payroll that can become opportunities for fee collections for additional services. Now let’s look at other business issues that need to be considered.