How Can I Outsource Payroll for My Company Through an Accountant: Your Complete Guide
Payroll processing is one of the most complex, time-consuming, and legally risky aspects of running a business. One mistake can result in penalties, unhappy employees, and compliance nightmares. Outsourcing payroll through an accountant offers expertise, accuracy, and peace of mind. Here's everything you need to know about making this smart business decision.
Why Outsource Payroll Through an Accountant?
The Complexity Challenge
Payroll Isn't Simple:
Federal, state, and local tax calculations
Varying tax rates and regulations by location
Benefits deductions (health insurance, retirement, HSA)
Garnishments and child support withholdings
Overtime, bonuses, and commission calculations
Multi-state employee compliance
Quarterly and annual tax filing requirements
Error Cost: IRS penalties for payroll mistakes average $845 per error, with some violations reaching $50,000+.
The Accountant Advantage
Why Accountants Excel at Payroll:
Deep understanding of tax law and compliance
Integration with your overall financial strategy
Quarterly tax planning aligned with payroll
Year-end tax preparation coordination
Strategic advice on compensation structures
Single point of contact for all financial matters
Value Proposition: Accountants don't just process payroll—they optimize it for your business strategy.
Types of Accountant Payroll Services
Full-Service Payroll Processing
What's Included:
Complete payroll calculation and processing
Direct deposit or check distribution
Tax withholding and quarterly deposits
W-2 and 1099 preparation and filing
New hire reporting to state agencies
Unemployment insurance management
Workers' compensation coordination
Employee self-service portal access
Ideal For: Businesses wanting completely hands-off payroll management.
Hybrid Payroll Services
Shared Responsibility Model:
You handle time tracking and approval
Accountant processes payroll and taxes
You distribute payments to employees
Accountant manages compliance and reporting
Cost Benefit: Lower monthly fees while maintaining accuracy and compliance.
Payroll Consultation and Review
Advisory Model:
You use payroll software (Gusto)
Accountant reviews for accuracy quarterly
Tax filing verification and compliance checks
Year-end reconciliation and W-2 review
Strategic compensation planning
Best For: Businesses comfortable with technology wanting expert oversight.
How to Outsource Payroll Through Your Accountant
Step 1: Assess Your Payroll Needs
Questions to Answer:
How many employees and contractors?
How frequently do you run payroll (weekly, bi-weekly, monthly)?
Do employees work in multiple states?
What benefits need administration?
Do you have union employees or prevailing wage requirements?
What level of reporting do you need?
Complexity Assessment: More employees, locations, and benefit types increase service needs and costs.
Step 2: Find the Right Accountant
Essential Qualifications:
CPA license or EA (Enrolled Agent) credential
Specific payroll processing experience
Knowledge of your industry's payroll requirements
Current on federal and state payroll tax law
Professional liability insurance
References from payroll clients
Interview Questions:
"How many payroll clients do you currently serve?"
"What payroll software do you use or recommend?"
"How do you handle payroll tax compliance?"
"What's your error rate and guarantee policy?"
"How quickly can you process emergency off-cycle payrolls?"
Step 3: Understand Service Costs
Example Calculation:
10 employees
Bi-weekly payroll (26 runs annually)
Base fee: $100/month = $1,200/year
Employee charges: 10 employees × $8 × 26 runs = $2,080/year
Tax filings: $150 × 4 quarters = $600/year
Year-end: $200
Total Annual Cost: ~$4,080 ($340/month average)
Step 4: Gather Required Information
Employee Documentation:
W-4 forms (federal withholding)
State withholding certificates
I-9 employment eligibility verification
Direct deposit authorizations
Benefit enrollment forms
Emergency contact information
Company Information:
Federal EIN (Employer Identification Number)
State tax ID numbers
Workers' compensation policy details
Current year payroll history (if mid-year transition)
Step 5: Set Up Systems and Processes
Implementation Steps:
Choose payroll software platform (often accountant's recommendation)
Configure company settings and pay schedules
Enter employee information and pay rates
Set up tax withholding profiles
Establish approval workflows
Test with trial payroll run
Train employees on self-service portal
Timeline: Allow 2-4 weeks for complete setup.
Step 6: Establish Communication Protocols
Regular Touchpoints:
Payroll submission deadline (typically 2 business days before payday)
How to communicate employee changes
Emergency off-cycle payroll procedures
Quarterly review meetings
Year-end planning discussions
Clear Expectations: Document who does what and when to prevent confusion.
Working with Your Accountant: Ongoing Process
Your Responsibilities
What You Still Handle:
Track employee hours and approve timesheets
Communicate employee changes (new hires, terminations, raises)
Provide bonus and commission information
Approve final payroll before processing
Maintain adequate bank account balances
Time Investment: Typically 30-60 minutes per payroll period.
Accountant's Responsibilities
What They Handle:
Calculate gross to net pay accurately
Process tax withholdings
File and pay quarterly taxes
Handle garnishments and deductions
Maintain compliance with changing regulations
Generate reports for your review
Resolve payroll discrepancies
Benefits Beyond Basic Processing
Strategic Payroll Planning
Value-Added Services:
Optimal pay frequency recommendations
Employee vs. contractor classification guidance
Benefits package cost analysis
Overtime budget planning
Commission structure design
Bonus timing for tax optimization
Year-Round Tax Planning
Integrated Approach:
Payroll tax implications for business tax strategy
Quarterly estimated tax coordination
Owner compensation optimization (W-2 vs. distribution)
Retirement contribution planning
Year-end tax move suggestions
Compliance Protection
Risk Mitigation:
Automatic updates for tax law changes
Multi-state compliance management
Audit support and representation
Penalty abatement assistance
Documentation maintenance
Red Flags: When Not to Outsource to an Accountant
Warning Signs
Proceed with Caution If:
Accountant has no payroll experience or references
Unclear about service scope and pricing
Unwilling to provide service agreement
No professional liability insurance
Promises unrealistically low prices
Poor communication or responsiveness
Alternative: Consider dedicated payroll service with an accountant providing quarterly review.
The Bottom Line
Outsourcing payroll through an accountant combines processing efficiency with strategic tax planning and compliance expertise. While it costs more than DIY payroll software, the value—error prevention, time savings, and strategic guidance—typically exceeds the investment.
Key Insight: Payroll outsourcing isn't just about avoiding work—it's about avoiding costly mistakes and optimizing compensation strategy.
Decision Factors: If you have 5+ employees, complex benefits, or multi-state operations, professional payroll management typically pays for itself through avoided penalties and time savings alone.
Start by consulting with a qualified CPA experienced in payroll services. The peace of mind and strategic value make this one of the smartest outsourcing decisions for growing businesses.