Is Your Accountant Recommending Software — or Selling It?

If you handle your own payroll and pass reports or data to your accountant at quarter-end and year-end, here is a question worth asking. Does your accountant tell you which payroll software to use? If so, why?

I can answer that. Money.

Some payroll software vendors pay a signing bonus, a monthly commission, or both, to anyone who steers a customer their way. That includes accountants. The bigger vendors run formal programs for it — partner tiers, referral dashboards, revenue share that grows with the number of clients enrolled. The money is real, and the small business owner is the one paying it. The accountant collects on the back end. The customer pays the full subscription on the front end.

I will name names, because the point does not land without them.

• ADP advertises up to 75 percent revenue share plus ongoing residuals for accountants who refer clients.
• Gusto runs two tracks. The partner program pays up to 20 percent revenue share, or an equivalent discount the accountant can either keep or pass to the client. The separate referral program pays a Visa gift card on a sliding scale — 300 dollars for the first referral, 400 for the second, 500 for the third, 700 for the fourth, and 1,000 dollars for the fifth and every one after that. The referred business gets 100 dollars.
• BILL pays referring accountants up to 500 dollars per converted client.

There is nothing illegal about any of this. There is also nothing hidden about it on the vendor side. The numbers are right there on the vendor partner pages — Gusto even publishes its referral tier schedule on its own legal page. The question is whether your accountant has mentioned the program to you.

What the silence sounds like

Here is what I hear, several times a year, from longtime Medlin customers. Their accountant has told them they should switch to a different payroll software. Sometimes the message is firm — your bookkeeping would go more smoothly if you were on this other product. Sometimes it is softer — I would prefer if you used this. The customer emails us, often a little rattled, asking whether we are going away or whether they are doing something wrong.

In every one of those emails I can remember, one thing has been missing. The accountant has not mentioned that the recommended software pays them. Not the rate, not the program, not even the fact that one exists.

A recent example. A customer wrote to tell us their accountant had instructed them to stop using Medlin and switch to Gusto, on the claim that our federal and state withholding calculations were incorrect. To the customer's credit, they did not just switch. They wrote back to us, said they wanted to keep using Medlin, and offered to pay us — credit card on the table — to review their actual payroll and prove the math.

We did. The calculations were correct. Federal withholding, state withholding, all of it. The accountant's claim was not a close call. It was simply wrong.

There are two charitable readings of that accountant's claim. Either the accountant was not actually a payroll expert — and a lot of accountants are not, because preparing returns or keeping books is not the same skill set as calculating a paycheck. Or the accountant was steering the customer toward a product that pays a referral. I do not know which one it was. The customer does not know either. And that is the point. When the recommendation comes wrapped in a technical accusation, and the commission program on the other end is not disclosed, the customer cannot tell whether they are being given advice or being sold a product.

There is nothing wrong with an accountant trying to make ends meet. Running a practice is real work, and a referral check is a legitimate way to add some margin. The problem is not the income. The problem is the silence. Every fee an accountant earns should be visible to the customer paying for the advice — the engagement fee, the per-return fee, the consulting hour, and yes, the commission from the software the accountant is steering you toward. Transparency does not pick and choose which revenue streams it covers.

That is the transparency gap. The vendor's program is public. The accountant's enrollment in it is private. The customer is making a software decision with one of the relevant facts withheld. And the customer is the one paying the higher subscription that funds the whole arrangement.

“But they are giving me a discount”

Here is a wrinkle worth pulling out separately. Sometimes the accountant offers a discount on the recommended software — a few dollars a month off the list price. That can look like the accountant is doing the customer a favor.

Read the Gusto partner terms and you will see how the discount actually works. The accountant chooses, per client, whether to take the partner discount as a revenue share into their own pocket or to pass it through to the client. Either way, the discount is money the vendor was already willing to give up. If the accountant passes a piece of it through, the rest is still flowing somewhere — usually back to the accountant in a different form, or to the firm at a tier level the customer never sees.

A discount is not the same as no commission. A discount is sometimes a smaller commission, shared. Worth asking which one you are looking at.

What we do and do not do at Medlin

Medlin does not pay accountants signing bonuses. Medlin does not pay accountants monthly commissions. We do not want you paying more for our software so we can hand part of it to someone else. That is money out of your pocket for no benefit to you.

We have, in the past, offered referral discounts where both the referring customer and the new customer received a one-time discount, and we will likely do that again. When we do, it is a true discount. We do not raise prices on anyone else to cover it. We simply take less revenue on those two customers. The discount comes out of our pocket, not someone else's, and it is a one-time event. There is no dashboard, no tier, no monthly check.

The “easier for the accountant” version

There is a softer version of this conversation worth addressing too. The accountant says a particular payroll software is easier to work with, or that they only support certain platforms. Sometimes that is true. Sometimes it is also true that the accountant is enrolled in that vendor's partner program. Both things can be true at once, which is what makes the conversation tricky.

Here is the part worth sitting with. You pay your accountant to handle things for you. You do not pay your accountant so that the work is more convenient for the accountant. An accountant who is good at the job should be able to take a payroll report from any reasonable software and work with it. I know what is in those reports because I write the code that produces them. Gross wages, taxes withheld, employer taxes, totals by quarter. The format varies. The substance does not.

If your accountant tells you they cannot work with what you have, that is worth a follow-up question. Not a confrontational one. A plain one. What about my current software does not work for you? The answer will tell you which conversation you are actually in. (I wrote more about the principle of meeting people where they are in Help Me Help You.)

What honest disclosure looks like

Medlin does receive a small commission on four items. I am going to list them, because the whole point of this post would collapse if I did not.

• Nelco, for 941 e-file. Integrated, which is convenient. You can pay the vendor of your choice.
• Nelco, for W-2 e-file. Or you can file directly with the SSA at no cost using their self-service site. We tell customers about the SSA option in the program.
• Medlin Forms, for paper goods. Pre-printed check stock, W-2 forms, 1099 forms. Or you can use any compatible vendor. We list the specifications so you can shop.
• Kotapay, for ACH direct deposit. Or you can use any ACH vendor you choose. Many customers do.

Three things hold across all four. First, we recommend each one because we think it is a good service, not because of the commission. Second, where the vendor offers tiered commission levels, we stay on the lowest tier. We are not building a business around stacking up referral revenue. Third, when a self-service or do-it-yourself option exists — like the SSA's free W-2 filing — we tell customers about it and support it. That last part matters because it is the difference between offering a convenience and locking you in. We are not interested in vendor captivity, ours or anyone else's.

That is the test for whether disclosure is real. Disclosure that comes with no alternative is not disclosure. It is a notice. Real disclosure means the customer can walk to the other option without friction, and the vendor will help them get there.

What I would hope an accountant would do

The opposite of what I have described in this post is not complicated. It looks like this.

When a client asks for software guidance, suggest a few options other clients are using and explain what works well about each. Suggestions, not directives. The choice stays with the client.

Accept whatever reasonable software the client is already using. The reports are not exotic. Any competent accountant can work with them.

If a recommendation does come with a commission, a bonus, a gift card, or a revenue share on the other end, disclose it. Up front, without being asked. Tell the client what the program pays, what tier you are on, and whether anything is being passed through. Let the client weigh the recommendation with the full set of facts.

That is not a high bar. It is just the basic honesty that any professional relationship runs on.

What to ask if it has not been offered

If the disclosure has not come on its own, this is the question to ask. It is not an accusation. It is a plain one, and an accountant who is operating in good faith will answer it without hesitation.

Do you receive any payment, commission, discount, gift card, or revenue share from the payroll software you are recommending? If you are offering me a discount, is that discount coming out of a commission you are also receiving? If so, would you tell me how much, so I can factor that in?

An accountant who answers cleanly — yes, here is the program I am on, here is what it pays, here is what I am keeping, and here is why I still think this software is the right fit for you — has done the job. You have the information. You can decide. That is what the relationship is supposed to look like.

An accountant who deflects, gets defensive, or treats the question as rude is telling you something else. File that away.

The bigger point

Whoever your accountant is, and whatever software you use, the relationship works when the incentives are visible. Most accountants are honest people doing competent work. A formal partner program does not automatically make a recommendation bad. Sometimes the recommended software really is the best fit. The problem is not the program. The problem is the silence around the program.

A professional you engage should be working for you, not telling you how to work. You are paying for advice. You are entitled to know what is shaping it. And you are entitled to make your own choice about the rest.

See also: Help Me Help You and DIY Payroll vs. Payroll Service.