324 How To Run A Profitable PAYROLL Practice!

This was a fun one. Matt Patrick, I met him at a conference and he was absolutely cranking on payroll, like running a super profitable payroll practice. And I immediately went, excuse me, there's something different about you if payroll gets you excited.

And we were talking about it and.

He just had such intelligent answers for all the annoyances that I had encountered.

Related to delivering payroll services to clients.

So that'd be a fun one to to have. He'd be fun to have on the pod. He's now he's since gotten into the.

Business of doing this for firms and so we kind of in the conversation, we kind of try to delineate like.

With your firm runner hat, what do you do?

But also knowing like Matt does it like he partners with firms if you don't want to fuss with it. So to be transparent about that, links.

To all of his stuff down in the show.

Notes as you're listening. A super sharp guy.

Definitely some things here I would have stolen and how I was running my payroll practice and I'll be honest, in 2024, do I want to run my own payroll practice?

I don't know.

I actually asked him that at the end.

If you were to go out and start your own thing again, would you partner with somebody or would you roll your own. You know what, I'm just going to make you listen to the end to find the answer.

So come on in. Matthew Patrick. This is a good one.

Okay, Matt, thank you for being here.

Happy to be here.

For folks who haven't encountered you in the wild or don't know anything about you, what's the like quick rapid fire intro to you and what you do these days?

Yeah. So firm small business accounting firm focused, basically a cast practice, Memphis based clients everywhere. And then that's on the accounting firm side. And then we separated our payment payroll business and that's called works spelled weird W H I R K S and that we do payroll, HR and employee benefits. And that's been. We did that, we split that off in 2009. So it's been about 15 years now.

Because who wants to do payroll and HR and benefits? Right.

Of course, I wasn't gray headed when I started.

So we first met at a PASBA.

Conference and this is what was super interesting to me and I was like it'd be good to go deep on this on the podcast.

Why payroll? Like what were the baby steps?

Obviously now this is like mega your wheelhouse like. But what was the very beginnings of that?

Client one. I always say client one. So funny. I Came from the big four. My first client as I'm opening up said, hey, can you help me with my W2s at end of the year? And we're like. And I was like, any new business owner, I was like, sure, I'll do anything for a dollar. And so I think I charged them like 2,500 bucks to do 10W2s because I had no idea what I was doing. And they paid it, which was fine. But at the time I was like, I found real quickly that the combination of payroll and accounting for the small business client goes so hand in hand. Most of the, they don't even think of those as separate things. And then it's the biggest expense on all of our clients books. I mean most of our clients are service based businesses and it's people driven and them having a good process and where the money is going, but also how that's being accounted for and decisions are making because of people. So trying to make that a really clean process for a total back office. So that was client one. Get down the path of six, seven, eight years and you start going, no, I'm not sure. People realize that we do payroll for people that we don't do accounting or tax work for. And I, I was kind of tired of dealing with this client choosing this payer provider. This client's using the other payroll provider and the reports, how I get the information, how I integrate with it. On our accounting side, it just, it created a lot of complexities for us. So we decided to, you know, go all in at that point.

Yeah. I mean, did you, did you come.

Into it the way that most accountants do or.

It's sort of like a begrudging yes. Like it feels like a loveless sort of thing.

Every day is a dang deadline. I don't want to every. If I, if I mess up somebody's check for two, two dollars, they're mad. And so in theory it was just, it was definitely begrudgingly at first. It was felt like we had to do it. It really wasn't an option and we didn't have all the systems around how to doing it. Well.

Okay, so so to just kind of roadmap for everybody. This is a service that you do for firms now.

Correct.

And we'll, we'll talk about that in terms of like your journey running a firm. You said you were a big four guy. Did you go out and start your own thing at some point? Did you partner with somebody? What did that look like?

0. Out of my house, in my house for four months went, went pathway was moved out of my office at home and four months later because I knew I couldn't work from home. Sorry J.C. i don't know how you do it every day but as I've grown the practice we, we quickly focused on monthly accounting services. That's where I have always lived, you know, providing back office solution, simplifying financials. And then from there I just felt like it was an immediate what they assumed I was doing it. I didn't even think I really had a decision in it. And so that was part of the pathway as we found it was there's a staffing problem so you have redundancy issues with what happens if the person who does payroll is out sick today or what happens when the software doesn't work or when the people don't get paid that you thought the file was submitted to the bank but it wasn't submitted to the bank or whatever it was. And so those are some of the early. We have got to figure this out or I got to say we're not going to do it at all. And it was, you know, like I didn't feel like I could just put my toe in the water.

Yeah, that's.

Those are all the reasons why people run from it.

Matt. What like so that, that tipping point was it, was it really like a we either need to cut bait or we need to like radically change. Do it or go home.

Right? Either do it or go home. And I felt like a. There's some money to be made with it and add volume and honestly the experience from the client standpoint was terrible. Like they were mad at their payer provider or they were switching and we were getting bad data or they really had no processes around it and it was such an integral part of their overall operations from managing their people that it just made sense to see if we could do it.

Well yeah, if I can take you on a tangent, the state of like payroll software platforms I honestly I feel like has never been worse. I had hope for a bit there and now it just seems like everybody's got issues of some form or another.

Yeah, we went through all of those. So we started off doing payroll for our Payroll clients through QuickBooks Desktop. I mean that tells you how far back I went through other service. I went look for other options. So service bureau level software. So executay was who we chose at that point. Data management was hard. This is pre really SaaS based payroll software and that just made things clunky, you know, database management between the Employee, the employer and us was always a struggle. Connectivity was an issue, getting data in a timely manner. So we explored a lot of options. We went to the top, we went through Thomson Reuters, we used accounting CS for payroll. Found that we ran into very big limitations with complex client size, availability of bolting on other things to it. So HR or benefits or time and attendance or scheduling, onboarding, all the other tools you need to run a really. A true payroll software. A complete solution wasn't available. I mean you could kind of do it if you bolted on 37 things and they all kind of work together, but they didn't really work that well together. And so that was a journey we on. We went on. We found a really good partner 2015. So that tells you it was, you know, at this point, we've been doing it for 10, 11 years, kind of working our way through it. At that point we had probably, we were probably making 350 grand a year in revenue from payroll with maybe a person or two, but I don't even imagine I was probably making any real money. It was just a. But a bunch of headaches. I'm probably starting to see a little profitability at that point, but it wasn't super profitable yet.

So.

So if you hop in the time.

Machine when you're at that tipping point of deciding like, do I cut bait or double down? What, when and how you do today is going to be very different than what you were thinking back then, no doubt. What did it look like? What was the act of doubling down? Like, how did you solve for those redundancies? Where did it start?

We had to over hire number one. So we had an extra staff at all times for the what happens if that person decides not to come to work tomorrow, gets hit by a bus, gets sick, goes on vacation, Redundancy at the bank. We were using our local bank to provide tax payments and all that stuff, but we'd have redundancy at bank. We had to have what happens if scenarios if the software that we're working crashed out and we don't have access to payroll data because it's every day as a deadline. So it's just, it was one of those things where you're like, I probably was. I just probably put my head in the sand more than I should have of oh crap. What would have happened if I didn't do this? If this would have happened to me, it would have been really bad. Luckily, nothing majorly, majorly catastrophic happened, but at the same time it, it obviously could have. So I guess we got a little lucky. I mean, I do remember many times running to the bank to make a direct deposit deposit that did not hit his employee's bank and physically depositing a check in that employee's bank to make sure they got paid. That was early on. So I don't ever want to do that. That's not a business model to run when, you know, we're paying more than 15,000 employees a month now. So it's a little different.

But wow, that's wild. So obviously the machine has evolved a lot from there.

Yeah, it really started, the machine started for us with the if we're going to do this, we have to have a truly competitor, a true competitive solution for our client that we want to serve. Can we do all the things that that client needs in an efficient way? So what tools or software are out there to do that? So we evaluated, you know, probably 15 different solutions at the time. Evolution and I solved and execute again. And we looked at AdaptaSoft and we looked at, oh, there's a, there's a thousand of them. And it became really apparent that there was really only two or three players that had a fully complete solution that was leverageable by an outside bureau. Not as then you were just going to let them do all the work and you get a very small share of the money. And so that's how we got to our partnership with Isolved. They have an isol partner network. There's 130 or so of us across the country. We're one of those. And they really forced our hand at growth because it was major commitment of dollars on the software, but also major commitment on terms of you have some fixed minimums in a very fast way that you have to pay them, so you're going to commit it to growth. So it was commitment to salespeople, commitment to all the different people internally. You need to have to support all the different things in that solution. So time and attendance, benefit administration, onboarding, high volume of clients, the tax engine. So that it became a whole nother business that we were running besides the accounting firm.

Yeah, I mean most people, they're running.

Out to build their payroll practice. They're going to ADP paychecks, gusto, rippling like what is, what is the scale beyond which, or I guess the scale you need to get to, to start like with something more off the shelf, like what you're using if, if you're.

Not having the ability to generate a half a million dollars of revenue. So just do simple math on that. That's you know, best case scenario, half a million dollars revenue, you might be making 100 grand net. If all things work out correctly with labor and software costs and everything else, let's say you could get 20% to the bottom. If that was true, then it probably makes some sense to start looking at alternatives to one of those other options. Or, you know, using an outsourced partner like us. Like you could do this with adp, Paychex, us, Ripley and Gusto. It's all kind of similar logic, but there's no ramp there for you ever to necessarily want to take it above just what I think was just kind of a referral relationship almost. It's Gusto manages the client or rippling is managing the client where you just have one platform. We're going to make a small percentage of those of those dollars. It's not really worth it other than the simplicity of the back office that I can control, you know, my clients being in one spot.

This episode is sponsored in part by liveflow. I love software vendors when they love me and it's why when I go to accounting conferences, I look around and I say who's here and who's not here. You will consistently notice that the folks that turn up at accounting conferences, the brands are the most engaged, have the best understanding of accountants. There are enough tone deaf software companies out there that just do not get it and like are not solving meaningful problems for us or, or are developing in this direction that they think is interesting and we're like, no, no, no, no. Like this is the path. It's actually interesting for my business. Live Flow, man, you see them out in the wild. I see those folks probably six to eight times a year, the founders at all sorts of different conferences. It is a great validation that they are actually building something of meaning for the way that we work Life Flow. Basically their business is they Sync data from QuickBooks or 0 to Excel or Google Sheets.

And there's a bunch of different ways.

You can use that from reporting to extending information to like third party stakeholders who you don't want to have in the QuickBooks file to month end close management. A growing number of firms are actually managing the month end close from a single workbook by sinking a bunch of data out of the accounting file all at once.

So you got a whole bunch of tabs in this big workbook.

You're not like printing a bunch of.

Reports from the ledger, right?

Like that's what they're trying to get away from anyways. LifeLow is a company that's been A leader in that for from the beginning. They're not like a quick little plugin like cheap utility as much as they are. We're gonna help you do this with a whole bunch of your companies. We're gonna help you with consolidations. Like we are the kind of the full suite for doing this like a platform for extending your spreadsheets rather than like a little utility to like sync.

Some data back and forth.

If you're at an accounting conference, take a look for Liveflow. You may see them there and learn more about LifeLow.

Check out the link down the show notes.

This episode is sponsored in part by Team Up. Do you like middlemen? I don't get here. Middle men and women. Team up cuts out the middle people.

Yeah.

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That is one thing that I heard they're doing more of is just like offering support.

Like hey, never worked with offshore people before. Happy to hop on a call and kind of give you some best practices. But what they won't do is be the middleman long term. Charging fees, cutting out a big old part of the monthly check that you thought was going to your team member that's actually going to line that middle person's pockets. Now team up.

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That's their model. Direct hiring in the Philippines. All they're going to do is they're going to help you find people rather than going through a BPO where you're paying like. Like a facility or kind of a facilitator or employer of record and the person. I know people that do it both ways. There's actually arguments to be made for both ways Team ups approach. They want to help you work directly with the team if that's the flavor you're looking for. Check out the link down in the show notes to learn more. Yeah, how do you.

Like Peril isn't particularly in vogue like because I think it's perceived as sort of going. Oftentimes perceived as going down the value ladder. Like of all of the things. Of all the things you could invest in and spend your Time on. And maybe this is just the argument for like outsourcing it to a partner, but what led you down the path of like, of all the, of all the things that we could do? Because there's, I mean, even.

Why did I pick payroll?

Yeah, yeah.

It means I didn't probably realize it at the time, but in hindsight, the value for a payroll book of business versus an accounting book of business is light years different.

Really?

So. Oh, light years. So at a minimum, on a very small scale, 1.3 annual revenue for a payroll business right now from ADP. Even if you only had 25 clients on scale, that could be, you know, 8 to 10 EBITDA pretty quickly.

Yeah.

And it should be fairly leverageable and profitable as you scale. And there are some firms that have seen as much as 14, 15 times EBITDA. There's a multiplier effect because as you know, most of your clients, the lifetime value of that client on apparel business, if it's working, they're not changing.

Yes, for sure. Who's my payroll practices? Is it, is it just groups like you that are just focusing on payroll?

PE is still involved, Very much so. Kind of gobbling them up. The, the other players are still the big boxes. So Paychex, Pay, paycom, paylocity, Pay Core, they're all still buying books of business. And then also the larger partners. So Evolution Isold buys books. So there's always a market out there. And, and in, in our world, like out of the 130 partners, we're probably one. We're probably in the 40 to 50 percentile mark. Right. Median to size. But there are some bureaus that are doing 50, 60, $70 million in payroll. So you do that math and you say, what's that number look like? If I could get, you know. So our goal right now is what does a $10 million payroll practice look like for us? I'm not looking to exit anytime soon, but I wouldn't mind knowing what that thing is worth. So if and when I want to separate that from the accounting firm, it does make sense. They're separate entities today and I have different, you know, long term plans or different ownership structures between the two.

Wow. So, I mean, is it worth it for anyone to like, at my firm, we had a referral relationship with a, a group that just, it was like a local shop that just did payroll and they were fine and then the owner left, then they were awful.

Is that something this day and age.

You'D recommend people going out and just rolling a straight up payroll Shop.

So that is a. Oh, you mean like just buying up a apparel shop?

You could buy it or just build a shop that from day one is just going to do payroll.

That's a hard. That's a hard initial floor to hop over, I would think if I was going to do it. The people that I've seen the most successful come from the big box payrolls and they're usually on the sales side of this because payroll really is a sales engine more than an operations engine. Because once you get the client up and running on the sales side and the client's processes are dialed in, it's pretty low touch from the maintenance of that client. There obviously is stuff that comes up and as they grow and develop and need other things. And that is part of the evolution and the lifecycle of the client with us. But I've seen the best success when you think of payroll as a sales engine, not as an operational engine. So the firms, the other larger payroll bureaus that I've seen that are most successful have it their sales engine first they figure out the operation side.

We've said HR a couple of times. What are, what are I guess sort of the adjacent to. Besides just like the processing of the payroll, what are some of the adjacent services that people ought to be thinking about?

I mean, what we have involved in ours is anywhere during the entire employee life cycle. So we do everything from assisting them with their applicant tracking management. So how they're going to recruit, put ads out there, put people through a funnel onboarding. So having an electronic onboarding solution that makes sense for today's age, where that is built into the. Into the system. HR for us is we always. Our client is what we think of as HR is one of the hats they're wearing, not the only hat. So most of our clients are in the 30 to 70 employees. They probably don't have a dedicated HR person on staff, but they may have an office manager, a general manager, the spouse of an owner or you know, whatever who is wearing HR as one of their hats and need a support team around them. We're not in a high compliance state. We're not in California, we're not in New York, we're not in Ohio, New Jersey, we're in Tennessee. So it's a little different for us, but for our clients out of state, you know, we still find the same stuff of we want to be their support arm for all things hr. So we do everything from initial risk assessment on their hr, make sure they're in compliance to get their Handbooks up to date. And then we have, we have an educational track for them as well as a direct outreach program. If they have any questions, they come to us, we help them provide guidance and then our HR team handles all that. With regards to, you know, I need to let this person go or what's going on with COVID at the time or it was what was. You know, I have the situations come up between two employees. They you know had whatever relationship that we need to make sure we're communicating stuff properly on. And those are the kind of questions we get day to day in our typical client still. We do a lot of restaurants, we do a lot of professional services. So those are still what we see are those clients typically don't have an HR back office. And, and we do a lot in the home health care home home care space. And so those are the areas where that has a high turnover, low lower paid employees. So turnover management, that's what we see a lot in the HR side.

One question on the HR side, what is, what does that look like practically to support them on the HR side. Is that like coaching them and then the business owner has the conversation. Is that like actually coming and sitting on a meeting?

We are, we are not providing a full outsource like we are your HR department. We will, we, we support you as the HR person internally. There's other firms do it differently. That's us. We, we find that I don't the scope creep on on that would be enormous of how needy is that client? I want to educate that person to run a better business. And that's kind of our overarching theme. One of those things is how do I run a better back office and simplify my people management, simplify my back office. That's what we're trying. That's our overarching mission. So we kind of stay in that lane. Same thing with benefit management. So we do, excuse me, two different benefit offerings. One is we are your broker of record. We manage and provide benefit services through that. But in addition to that we offer full benefit admin outsourcing. So we reconcile their benefit statement every month. We deal with the employees as they have questions on benefits. We manage open enrollment, we update all their information inside the payroll system and with the carriers for whoever they're with. And that's a complete kind of that idea of how do I get rid of all this back office administration type stuff we want to do for them. So we want to. We try to package that together as a. You could have us handle basically all things people with some assistance from you. And then all things financial.

Yeah, we kind of, we kind of stumbled into this in my firm. It was just you, you think you're going to start out doing payroll processing and then it's like, no, this person has a question on the pay stub and somebody's got to reconcile the, the invoice. And, and that happens.

Then you initially get a payroll question that is hey, I need to let this person go or hey, what do I do about this overtime rule? Or what do I hey, I don't want to pay this bonus through payroll, but I want to pay them. Those are the kind of questions we get. And you're like, I need to navigate those in a wise way to make sure the client understands what their risks are and then also how to best manage those. As an owner, any business owner.

Yeah. And I think a lot of people.

End up, firm owners end up backing.

Themselves into a corner. Cause they're like, well we're gonna do some peril and it's gonna be pretty trivial and quick and then you get sucked into all those things and the.

First client will mess you up, I guarantee it. Like it's almost immediate.

Well, and we've all been in that situation where we've committed, committed to doing something at a price that isn't reasonable at all. This sort of like managing the benefits, all that stuff on behalf of the client. Like how much say for a 20 or a 50 employee company, like how much if a firm's gonna try to do this themselves, like what sort of engagement should that be? Month to month in terms of like revenue size.

We our minimum point for that even you know, for the first employee is fifteen hundred dollars. And so we, we charge as a per employee per month. So it scales as they, as the client size scales. We have some floors to hop over on the HR side at the level, you know, our minimum is actually pretty inexpensive. We have some one time fees associated with getting their handbooks and stuff done, but that's only costing them $5 an employee a month. We have some minimums to hop over. But the logic there is, you know, it's fairly low touch. It's when questions arise. But those are Pandora's box sometimes. So you never know what you're walking into. You know how, you know, we are an ethical business. Does that mean that other business that I'm working with wants to do things ethically and right. And we, and we have to navigate those waters with the. We're going to tell you the right answer and what you decide to do is on you. But, like, we want to make sure we're doing things the way there should be done.

Yeah. 1500 bucks a month like this. This is a completely different universe than the, the firms who are like, yeah, let's take another 90 bucks a month on the engagement. We'll, we'll just start processing the payroll, and before you know it, like, the whole engagement's upside down.

Yeah. I mean, our typical payroll clients paying us, you know, 200 bucks a month. So it's not a ton of money just for payroll. You know, it's. That's, that's priced competitively. We, you know, the system allows a lot of efficiencies are. And when you're thinking about this in terms of the economics of the actual model, it's only two pieces. It's technology and people just like, really, all the stuff that we do now, the better your technology, the probably more efficiency you get on. On your. You should get on your people, the work, your technology, the more time on your people. And so to the extent that you're going to spend money on the technology side and not have the people and the resources to run that technology, well, it's going to be inefficient. And so that's really the hurdle. I mean, like, the entry point into payroll. The real payroll software needs probably a couple hundred thousand dollars if you're going to make that leap. And like I said, $500,000 is probably the number before. I'd want to invest a ton of money in this because my return on my, on those dollars just doesn't make sense.

Okay, I'm, I'm trying to, I'm trying to think, what are all of the annoying workflow issues I had related to payroll that I would have thrown off a total guru just to be like, just give me the shortcut answer here. I got, I got three. Three, top of mind. Okay.

First, standardizing how I take in information.

For each pay run when everybody's running a different system and summer, hourly, summer salary, whatever, everybody seems to do their own thing. How do I gather that stuff in a standardized way?

Yeah, that is step one. Right. You know, I think back to the very beginning where we got paper time cards that we had to add up that we could hardly read, and then they forgot to clock in or out, and we were adding those up. That was like client three or four in their process. Like, that's not a way. 100% of our clients submit their payroll through the system. We do not key any data we teach them and service them with the mindset of. We will show you how our people, our payroll specialists or our customer service specialists, they're technology educators. They're not payroll nerds who have to know all the payroll rules. It's. Let me show you how to import your time out of your point of sale system into this system. I will help you get the map right. I will help you get the templates laid out correctly. And then you're going to import this in yourself. All. Everything we're doing is around the client having the power to control and simplify their processes. So we want the client to be in control of, here's my time. All my records are being automated into a one place. So if we can automate timekeeping through one system, we can automate the import from their point of sale or from their. Their EMR or whatever that is. We're going to systematize all that in a process to make their time gathering important. That's the same way when you onboard an employee. That's why we want to have a digital process there of. All right. I'm not going to send you a W4 and a new client form and a thing I need to complete. You're going to do this in this system 100% of the time. You're going to hire every person through onboarding so that we know if they have their i9 done, we know that they have W4 done. We know they've signed off on the handbook, we know they've signed off on their, you know, drug policy, whatever those policies are, and then all their information is there. They're going to enter their own direct deposit information. We're going to train you so that your employees have the power to control this stuff. That's not how most CP CPA firms who do payroll do it.

No.

So, yeah.

So inevitably you're gonna. You're gonna have the client that's like, I'm paying you to do my payroll. Why, why, why do I have to do all this? So how do you draw the clear line between here's your duties and my duties?

Yeah. So we tell them, look, hey, we understand that if this may have been how you do it before, if you were gonna type me an email to send me the hours, why wouldn't I have you type them in a place where we know they're gonna be right instead of us having to rekey them? Don't you. You're gonna have to validate that time and dollar amounts of hourly rates or whatever. At some point why would I do that? Post my entry instead of. And I already have a bad check in somebody's hand versus pre me entering it. So I'm not causing you more work. I'm actually trying to simplify your process there. And we just have to have that conversation. It's open and like, hey, look, I understand now. If you're all salaried and it's 100% of the time, it's the same, we can set you up what's called auto run. Like that's going to automatically happen. You have to let us know if something changes beforehand. You have to bless it and say, yes, but they're going to get paid. We only need entry there. But that's not, you know, most clients don't have that. They even have. You know, every small office still has somebody that's hourly at some point. All cycles don't matter. Like that's the thing. Like, because the system's there, they can run as many times as they want. So if they want to do weekly payroll or biweekly payroll or it doesn't matter. We control the management of the pay items so that their things are being taxed correctly. We, we manage the setup and the workflow of the process for the employee to make it as easy as possible for them to run a payroll.

This episode is sponsored in part by Finn Daily. Pop quiz time. Did you know that I once developed a SaaS app for accountants that fully automated the cash reporting that we did for our clients? True story, I built that like three years ago and then I sold it to a guy, Luke Templin. And Finn Daily is still running strong. I'll put a link to it down in the show notes Fin Daily IO. I frankly love it. Maybe I'm slightly biased, but basically how it works is it's like it's an email builder, kind of like an email marketing tool. But you plug variables into those emails and those variables can be values that are pulled from QuickBooks, from Xero, from Plaid, like banking figures, even from like zapier. If you want to pipe in your own information, you build these email templates and you plug variables in. It can do stuff like math, like adding up a number of outstanding bills, that sort of thing, tables of like outstanding invoices. Build all this stuff into emails and then you set the schedule that email will send on, and at the time that it sends, it goes out, makes the API call to all those services, pulls in current data, and then sends that email off. And this was the cash reporting that we were doing. For our clients to be like hey.

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Here'S how much money is in the bank. Here are all these different factors all in an automated email and folks were paying me a bunch of money for this service. Now since I got out of thin daily done a bunch more stuff like being able to connect to a bunch of different quickbooks files and like pull that stuff into a single email for like multi company sort of things. Banana bunch of cool things. Super useful tool. Like it's one of those things where if you have the use case for it you're like oh my gosh, where has this been all of my life? And if you don't, you're like why would.

I don't understand this. Why does this even.

Why does this exist? I don't. Why would I want this? I find that people are in like one of those two end of the camps. I still love it. Still around a fun bit of Jason Dailey lore. Vin Daly is Check out the link down in the show notes to learn more. This episode is sponsored in part by Forwardly. Are you sick of waiting for ach transfers that stick to bank hours or checks to get caught in the mail? Do you want to save hours on bill pay each month for you and your clients? Forwardly is your solution for Instant Instant Instant B2B payments. Forwardly offers an easy to use award winning ARN AP solution for accountants and their small business clients. Featuring advanced approval workflows and a revolutionary four way sync four ways with accounting software. What could the other ways even be? The software eliminates all manual work, automatically categorizes and records financial transactions for both customers and vendors, maximizing cash flow by ensuring payments are received instantly in your bank account. Enjoy saving same day ach for free. Why is that not a thing? Why is that not more of a thing? Forwardly.

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Okay, second question in 2024, how do.

I get my S Corp owner payrolls done?

Yeah, first of all, Tennessee's not a not an S Corp state so we're like one of the two. That being said, the S Corp payrolls, you know the the once a quarter I need to run it for my doc who yeah, that's similar logic. So it would be hey I need to run and and we would probably set them up on some kind of recurring schedule of salary and then do a True up at the end of the quarter and just have them, you know, go in the system and if they need to make a different payment, pay it. But most of most time we'd salary those folks.

Okay, so if I have, I've got a single owner, escort guys doing consulting or something like that, he comes to me, we put him on an escort for the first time. I got to run his payroll somewhere. He's not ready to pay anything for it. Like where, where do firms go for that right now? Is that like a sticking on Gus Gusto auto pay? Is that just a SaaS thing you think?

I probably would go to if it was a one person payroll like that. And I don't really need any kind of like HR management for that one person payroll. I probably would go to Augusto or I mean depending on what you're doing for your bookkeeping side. But I wanted that to be very easy. I want to control their withholding. I want to control the reasonable comp there, making sure they're funding their 401k solo k, how they're handling benefits if they, if they have the health insurance for themselves. But it would be pretty low touch. We have a number of that. I mean we have, we have a partner of ours in Florida that has a lot of that and they've set them up as a quarter, as a monthly low number. And it's a very low subscription. I mean you figure, you know, for a pretty inexpensive cost. We probably also wrap that payroll fee into our bookkeeping fee and bury it. What we probably would do.

Yeah.

So they don't even know what they're paying for that piece. That's not the best answer, but that's probably what we would do.

Okay, last question for you. Knowing what you know now, if you were unimpressionable, early stage running your own thing sort of accountant, would you wade into it? Would you look for partnerships straight out of the gate? Is there nuance there? And like maybe in this situation, maybe and not in this situation.

Yeah. So I always start with the end in mind. So what do you want your firm vision to be? Do you want multiple streams of income that could happen? Do you want to control your bookkeeping process really tightly? So that's some of the reasons why I did it. And I think that's, I like controlling that. All my accounting clients have to be on our payroll. Services that makes my accounting side really easy or easier are controllable of the Gl or controllable of withholding. All that stuff is, is in our, is in Our, our control. If I don't know what I want to do yet, you know, there's multiple options there. You know, finding a good referral partner that will treat your customers and clients the way you would want them to be treated and make you look good, not bad. That's one. If you think you may want to wade into the. I'm not sure yet, but I also don't want to spend all the money into it. Finding an outsourced partner would be a way to give you a ramp to see if it is something worth growing. So it depends on how fast you're growing your accounting firm, whether or not you have the sales and marketing resources to grow it at a scale that makes sense. Like I said, the cost of investment on the software side, if you're not going to grow, it probably doesn't make a ton of sense to spend a crazy amount of money on, on a platform that's, you know, a Ferrari when you need a Honda Accord.

Okay, should we, should we give Fasbah a plug here before we wrap up? So Matt and I first met a pasba.

I could tell you outwardly what I thought the. I think it is.

I want to hear your preconception and your post conception of Tasma.

Okay, so millennial accountant perception of pasba, very old timey. Part of the problem is all of.

Their web stuff is just like a.

Window into another era. But my outward perception of PASBA was.

A lot of very traditional people. I went, I spoke at a conference, they were doing.

And my post perception, you do have some people that are using old stuff.

That are using legacy stuff.

But even the people who are using legacy stuff, by and large, as I was having discussions with them, the way.

That they have systematized the machine and like built the machine and how they, how they communicate that stuff to clients much more mature and evolved than many of the, you know, avocado toast accountants that are, you know, using all the modern stack and everything. Would you agree with that?

A thousand percent. So I came from big four. I had no idea what I was doing. I was 32 years old when I joined Pasba. I, I was running at the time, first of all, very crappy practice. But number two, I was doing everything QuickBooks and they would have thought I had three heads. And I'm going, well, isn't it just the same thing? And they're like, nope. And so then you go like, well, that guy has 950 monthly clients. He's doing $12 million. He, he's doing pretty good. But it's. Those are Titanics. To turn at this point, to implement technology in that scale is way different. There's still a lot of small business clients that are out there that don't care about the tech. They care about the insight and the delivery. You know, how can you help me run my business better? What I love about pasbah is also it really changed my mindset from accountant to owner. I am not an accountant anymore. I own a business that is an accounting firm. I do zero production. It's a production, um, it's an owner, not in production mindset, which is. Was a foreign concept to me. Went on my own. Technology is absolute crap. There. There's a lot of reasons why those firms that are old school at this point, dated their Titanics are really hard to move. They're very profitable. They've got it systematized. The clients all come in a hundred percent of the same. They're not bringing in clients all over the board. The model, you know, it originated from comprehensive accounting way back in the 70s that. That imploded. And so what. They all had the franchise mentality of running an accounting firm, which kind of bled into the association as they formed the association. All those franchisees started it and that kind of has lived on. There's a lot of smart people in that room that are trying to figure out how do they turn their Titanics at the same time not imploding the old school stuff they still have.

That's the struggle that. So that your evolution from being in production, being out of production, you know, the folks who are still in the shoes of. They do production, that's all they've ever known. And that's. There's a big part of your identity, I think that's wrapped up in that like, this is just what I do. This is what I contribute. Did you grapple with that? You're like, that's not me. Like I'm. All I know how to do is.

At least I think I am. I want to be the helper. I mean, honestly, I have a helper mentality. And so I wanted to be the helper and solve the problems and be the person who I, you know, I thought I was the client's accountant. And that was hard. And it's still hard to this day to not want to jump in sometimes as an owner and say, hey, but, you know, developing the team around me has made me. First of all, we're servicing our clients a lot better than me doing it. I was going to do a lot of things poorly or few Things. Well, one of those things, you know, one of those ways going to happen and having, you know, these, these firms, you know, in a, in a recurring model like we're running these firms that are operating with not leveraged models, it becomes where you have a. Your market is. You have to have really highly skilled people to do really highly complex work in a very systematized way in order to make money. And that's hard and it's hard to find people and it's hard to leverage the work down to the person that can do the work best if you don't have them available or the work isn't really leverageable. So you know, our, our, our model is built off the back of our staff accountants and bookkeepers. And then our accounting teams, our, our county managers are, are hold the client relationship. And it's an interesting model for, you know, people that have come from Big four. It's hard to find people that have done accounting and tax bookkeeping intact. And so it's a different model to try to source people from and grow and develop them within the firm and understand it's a different, different animal to serve. But it's. I find it so much more rewarding. The clients that we're able to serve is super rewarding, but also the empowerment that you can grow and develop other people in your practice. Not where you have to be the person that has all the answers.

That was. Yeah, that was. That's still the thing I carry that was most fulfilling. You can solve client problems all day long, but like building the team and like enabling them like that was. That was far and away my favorite aspect of doing it, for sure.

Well Matt, thank you for doing this. Where can people find you online and.

If they don't want to fuss with all of this and they're like, matt, can you come just tackle our payroll HR stuff? Where do they find more info about that?

Yeah. Works.com spelled weird. Like I said. W H I R K S. We have a partners page. Would happy to have just conversation, see if it makes any sense. And you can find me anywhere online. LinkedIn. It's Matthew Patrick in Memphis, Tennessee. Love to connect.

Cool.

Thank you, Matt.

Thanks for your.