In a constantly changing business environment, entrepreneurs seek financial expertise and seamless, comprehensive solutions that empower them to manage their ventures effectively.
1-800Accountant – one of America’s leading virtual accounting firms tailored for small businesses – offers this powerful combination of expertise and technology to thriving small businesses and the growing self-employed of the gig economy. By combining the prowess of professional certified public accountants (CPAs) with cutting-edge technology, they provide a platform that streamlines financial tasks, maximizes tax savings, and allows business owners to focus on their long-term growth strategies.
As part of 1-800Accountant’s mission to deliver a one-stop-shop for entrepreneurs, they took a strategic approach to embedded payroll, powering the relationship between CPAs and their customers.
Navigating the Complexities of Entrepreneurial Taxes
Starting a business, especially for first-timers, can be overwhelming, especially when it comes to tax obligations. Many entrepreneurs are concerned about IRS compliance and the intricate web of tax regulations. 1-800Accountant steps in as a trusted advisor, alleviating these concerns.
As Ermal Kukaj, Director of Accounting Services, explains, “They want to pay their fair share of taxes; they don’t want to overpay, and they don’t want to underpay. We ensure they have affordable access to the expert advice they need to get it right.”
1-800Accountant is focused on the gig economy, and the rise of creative entrepreneurship has created a new generation of business owners who demand the same level of service and expertise as larger corporations. For many clients, their business journey becomes a learning process, with 1-800Accountant CPAs acting as their guides.
“We see it as necessary to offer a full-service solution because our clients are busy running their businesses. Clients get the most from our service when they sit with our CPAs to let them explain why they need to do what they need to do to optimize taxes. We bring them along for the journey.”
VP of Marketing at 1-800Accountant
Enhancing the One-Stop-Shop Experience with Embedded Payroll
Incorporating payroll services into their repertoire presented 1-800Accountant’s leadership with challenges that needed a delicate balance between organizational and client needs. Payroll was emerging as a pivotal aspect of the client’s needs, creating a demand for a comprehensive solution. However, building an entire payroll system from scratch was deemed impractical due to the complexities involved.
Josh elaborates, “When you combine the complexity of an owner’s draw, for example, with the compliance infrastructure needed to track thousands of tax rate changes, we quickly realized payroll would be uneconomic to build ourselves.”
The solution came in the form of a partnership with Gusto Embedded, which offered a pre-built payroll system that could be seamlessly integrated into 1-800Accountant’s platform. This allowed 1-800Accountant to provide clients with granular payroll data, enhancing their understanding and improving the overall client experience.
1-800Accountant’s Embedded Payroll Benefits
- Client Retention and Upselling: Embedded payroll acted as a touchpoint with clients outside of tax season, improving client retention. It also facilitated upselling, as clients were already accustomed to the platform and were more likely to opt for additional services.
- Enhanced User Experience: Offering payroll in-app (vs. a traditional integration) allowed clients to access pay stubs, W2s, and payroll reports directly from the platform, eliminating the need for additional paperwork. This not only improved user experience but also saved time and costs.
- Data-Driven Decision Making: Comprehensive payroll data gave CPAs a more accurate understanding of clients’ financials, enabling them to provide better advice on tax-related decisions. This data-driven approach was crucial in presenting clients with projected financials to showcase the impact of their choices.
- Improved Upselling Motion: The embedded payroll solution allowed 1-800Accountant to optimize its upselling strategy. The data-driven insights helped target potential clients more effectively, resulting in a higher conversion rate than industry benchmarks.
Gusto Embedded’s Role in Payroll Success
The success of 1-800Accountant’s embedded payroll solution can be attributed, in part, to their partnership with Gusto. The experience, compliance infrastructure, and pre-built UI Flows offered by Gusto Embedded significantly lowered the investment needed to establish the payroll system.
Moreover, Gusto’s support and guidance were instrumental in devising a successful go-to-market strategy for payroll. This approach gave 1-800Accountant the edge they needed to successfully introduce payroll services to their clients.
Sustainable Growth and Future Prospects
Building embedded payroll proved to be a game-changer for 1-800Accountant. The rapid adoption of their embedded payroll product resulted in a substantial increase in payroll customers in a short span. This promising growth trajectory has led to a substantial annual recurring revenue (ARR) run rate — $3.8 million in the first 12 months — showcasing the venture’s success.
However, the journey is far from over. For 1-800Accountant, embedded payroll is just one facet of their holistic approach to client service. The leadership team envisions using payroll to attract and retain more profitable clients while reducing churn. Embedded payroll’s treasure trove of data will further empower their technology platform, ultimately leading to better-informed CPAs and more satisfied small business owners.
“Building embedded payroll has allowed us to nudge clients sitting on the sidelines to provide the info needed to onboard for payroll. Our conversion to paying clients is now 75% vs. industry benchmarks of ~50%. Payroll has also allowed us to push into larger, more profitable S corps for whom payroll is a must-have.”
Director of Accounting Services
Ultimately, 1-800Accountant’s strategic integration of embedded payroll through the partnership with Gusto Embedded has ushered in a new era of comprehensive financial services for small businesses. By addressing the complexities of taxation and payroll management, they have positioned themselves as partners in their clients’ growth journeys. This case study is a testament to how a well-executed integration can unlock unprecedented growth opportunities and enhance customer satisfaction in today’s competitive business landscape.