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Payroll Processing Service Prices
Dealing with payroll is one of the more complicated tasks facing a business owner, especially in a company with many employees. Aside from making sure that your employees are paid on time and in the correct amount, payroll involves a host of other tasks, including withholding all applicable local, state, and federal taxes from workers' earnings, paying your fair share of taxes for each employee, updating vacation and sick pay, and more. Luckily, there are companies that offer payroll services, allowing you avoid this time-consuming process and focus your energy on more important tasks.
How Payroll Services Work
Outsourcing payroll involves paying a company to take care of a business' various payroll functions independently. When an employer signs up for a payroll service, it must set up an account and provide each employee's name, pay rate, and W-4 form, in addition to company tax information. When the time comes to pay employees, the employer submits each worker's hours for the period and funds are transferred from the employer's bank to the payroll service account. After that, employees are paid via check or direct deposit and the employer receives management reports.
That is the basic service provided by a payroll company. Payroll service providers can also perform more complex tasks such as issuing and processing W-2 and 1099 forms, ensuring that employer taxes are paid on time, managing employee benefits (such as keeping track of vacation/sick time, health benefits, and retirement payments), handling direct deposit, providing electronic signatures, and much more.
Benefits of Using a Payroll Service Provider
There are a number of advantages to using an outsourced payroll company, including:
- Saving time and money: Not only does a payroll service save you valuable time, but it can actually be cheaper than paying somebody in-house.
- Avoiding costly errors: It can be easy to make payroll mistakes, especially if an in-house payroll preparer is not well versed in accounting and tax laws. The result of any error could be a monetary penalty.
- Flexibility: Whether a business has ten or ten thousand employees, most payroll outsourcing services do not place a minimum or a maximum on the size of the payroll they are willing to oversee. And even if you start off with a basic payroll service, most companies allow you to quickly and easily upgrade to more advanced functions.
Payroll Services Sample Costs
- According to Entrepreneur.com, basic payroll processing services cost between $0.80 and $2.00 per check in addition to a base account fee, while advanced services such as direct deposit and tax filing could cost between $4 and $9 per payroll period.
- Companies such as ADP and PayChex might charge around $3 per check for basic services.
- A company with around 25-35 employees that uses ADP or Paychex to handle all of its payroll services (basic as well as advanced) might pay anywhere from around $250 to $1,500 a month.
- It may be possible to have an accountant perform payroll services. A small business with around ten employees might pay an accountant approximately $250 per month to perform payroll.
- Subscription online payroll services via companies such as VersaCheck and Intuit that work with computer software cost around $75-$250 per year.
- One Massachusetts retailer paid $25 per bi-monthly pay period and $35 for year-end filings per employee for full payroll services.
- A Colorado business paid $13/month per employee for full service payroll, tax filing, and direct deposit.
- An Insurance company from Michigan with 4 employees paid $45 per month for small business payroll services, including biweekly pay, envelope stuffing and signed checks, direct deposit, income tax payments, and monthly and quarterly statements.
- A consulting firm in California with fewer than 10 employees paid $31 per month to outsource payroll services, including full payroll, tax payments, W-2 and 1099 services, and yearend tax reports.