Payroll software for bookkeepers who run client payroll should give one login across many client companies, handle tax deposits and filings or make clear that you do, export a payroll journal each client's ledger accepts, and produce reports that let you match every run to the lines on the client's bank statement.
What should payroll software do for a bookkeeper running client payroll?
Payroll software for client work has four jobs: calculate each paycheck correctly, move the money, keep the tax side current, and hand clean totals to the books. A bookkeeper adds a fifth need that a single business owner does not have: working across many client companies without mixing them up.
Break the decision into those jobs and score each candidate against them. The checklist below is a starting point.
- One accountant or partner login that reaches every client company.
- Per-client permissions, so staff see only the clients they work on.
- Direct deposit and a clear schedule of when funds leave the client's account.
- Tax deposits and quarterly and annual filings handled by the service, with copies you can download.
- A payroll journal report or export with wages, employer taxes, withholdings and net pay split out.
- Reports that list each bank withdrawal the payroll run will cause.
- Year-end forms for employees and contractors.
- Data export if you or the client ever leave the service.
Payroll is not the only payment run
Payroll is one of several regular payment runs a bookkeeper may manage for a client. Vendor bills are another, and they share the same concerns about approvals and timing. The guide to bill pay software for bookkeepers covers that side, and many practices pick the two together so approvals work the same way.
Multi-client access in payroll software
Multi-client access means one login reaches every client company you run payroll for, with a clear switch between them and permissions per staff member. Without it, a practice juggles separate logins per client, which is slow and leads to running a payroll in the wrong company. Test the client switcher before anything else.
During a trial, check these points:
- The company name is always visible. You should never wonder which client you are in while approving a run.
- Permissions are per client. A staff member can be given access to some clients and not others.
- Activity is logged. You can see who ran, edited or approved a payroll.
- Client approval is possible. The client can approve hours or a run without seeing your other clients.
Payroll data includes Social Security numbers, bank details and pay rates. That makes access control a legal concern as well as a convenience. The guide to the FTC Safeguards Rule for bookkeepers explains what a practice handling this kind of client information is expected to put in place.
Does the payroll software file payroll taxes, or do you?
Many payroll services file payroll tax returns and make deposits for the client, but not all of them, and some only in certain plans. Find out exactly which filings the service makes, which deposits it pulls from the client's account and which tasks stay with you or the client. Get that split in writing for each client.
The federal quarterly return is a useful example of what is at stake. The IRS page about Form 941 describes it as the Employer's Quarterly Federal Tax Return, used to report income tax, Social Security and Medicare taxes withheld from employees' pay, along with the employer's share of Social Security and Medicare tax. If the payroll service files it, you still want a copy each quarter. If it does not, someone has to own the date.
Records to keep
Payroll records outlast the year they cover. The IRS guidance on how long to keep records says to keep employment tax records for at least four years after the tax is due or paid, whichever is later. Check that the payroll software keeps reports that long, and download them anyway into the client's own folder.
Moving a client onto your service mid-year
A client who switches payroll services partway through a year brings extra work. Year-to-date wages, withholdings and tax deposits from the old service have to be entered into the new one, or the year-end forms will be wrong. Ask the old provider for a year-to-date register per employee and copies of every quarterly filing made so far. Enter the totals, then compare one employee's year-to-date figures across both services before running the first payroll. The cleanest moment to switch is the start of a quarter, because the quarterly return then comes from one service only. Some services handle the year-to-date entry for you during setup; ask whether they do and what they need from you to complete it.
State filings
State and local payroll rules vary. Confirm each state the client has employees in is supported, including state withholding and unemployment filings, before you move a client onto a new service.
Payroll journal exports into each client's ledger
A payroll journal export is a summary of one payroll run, split into the accounts the ledger needs: gross wages, employer taxes, employee withholdings and net pay. Some services post it straight into the client's ledger through an integration. Others give you a report or file to enter. Either way, the totals must tie to the payroll register.
When you compare services, look at how the export handles:
- Account mapping per client. Each client's chart of accounts names wages and payroll taxes differently.
- Departments or classes. Some clients need wages split by location or job.
- Liabilities. Withheld taxes should land in a liability account until the deposit clears.
- Timing. The journal date should match the pay date the client's books use.
Payroll also feeds what the client sees each month. Wages are often the largest expense on a small business's profit and loss. The guide to client reporting software for bookkeepers shows how to present labour cost so a client can read it at a glance.
How do payroll lines match the client's bank statement?
One payroll run usually shows up as several separate lines on the client's bank statement, not one. Net pay leaves as one or more direct deposit withdrawals, taxes leave as a separate pull, and the service's fee may be a third line. Matching each bank line to its share of the payroll journal is what keeps the books right.
A worked example
The figures are an example for one fictional client's biweekly payroll. The journal shows the run. The bank lines show what the client's statement printed.
| Payroll journal item | Amount |
|---|---|
| Gross wages | 12,400.00 |
| Employer taxes | 948.60 |
| Employee withholdings | 2,815.40 |
| Net pay to employees | 9,584.60 |
| Bank statement line | Amount | Matches |
|---|---|---|
| PAYROLL SVC DIR DEP | 9,584.60 | Net pay |
| PAYROLL SVC TAX | 3,764.00 | Withholdings plus employer taxes |
| PAYROLL SVC FEE | 79.00 | Service fee, a separate expense |
The tax line equals withholdings of 2,815.40 plus employer taxes of 948.60. The fee is not part of the journal at all and needs its own category. If the client also writes a manual paycheck, it shows as a check number and must be matched to the run by hand.
Turning the match into a rule
Once you know a client's pattern, write categorization rules for each payroll line: direct deposits to a payroll clearing account, the tax pull to payroll tax liabilities, the fee to a service expense. The bank lines then code the same way every month. Extraction quality matters here, because a misread amount breaks the match. The guide to testing bank statement extraction software covers how to check amounts and descriptions on your own clients' statements. AutoBankConvert applies client rules like these to each converted statement and sends lines it is unsure about to a review queue.
Payroll software choices that create cleanup work later
Some payroll software choices save time this month and cost it back at year end. The usual ones are posting net pay only instead of the full journal, letting each client pick a different service, skipping the bank match because "payroll is handled," and not downloading tax filings before a client leaves.
Choices to avoid:
- Recording net pay as the wage expense. Wages and taxes are understated, and liabilities never appear.
- A different service for every client. Each one has its own reports, logins and quirks. Standardize where the client allows it.
- Booking the tax pull as an expense. Withholdings belong to employees and pass through liabilities.
- Skipping the monthly match. A missed deposit or a failed debit shows up as a notice from a tax agency months later.
- Leaving records in the service. When a client changes provider, older reports can become hard to reach.
An edge case: a client who runs payroll themselves
Some clients run their own payroll and send you the reports. The matching work is the same, but you depend on the client sending every report. Ask for the payroll register and the tax filing copies each period, and match them to the bank statement the same way you would for a run you made.