Different payroll services will have different billing structures. Some companies charge “per check,” or for each deposit made. It is also common to charge for each service individually, or to charge by employee for a certain “menu” of services. Most companies have a standard list of features, and then charge extra for additional services.
Most basic payroll packages include:
The total cost will depend on a few different factors, such as the number of employees you have, the length of pay periods, the complexity of tax calculations, and which state laws apply will all have a significant impact on the amount you pay.
- Basic withholding computations
- Online access for employees/employer
- Basic tax filing
- Direct deposit or check writing
Basic payroll service for a business can cost anywhere from $25 to as much as $200 a month. Businesses with less than 10 employees will usually pay more per employee, as volume discounts for large businesses are pretty common. However, businesses with a larger number of employees will be subject to more complex tax regulations, so savings from volume discounts might be negligible. Payroll outsourcing services usually also offer end of the year reporting features, such as generating W-2 forms, for an additional charge. Charges for features like online access, electronic pay stubs, savings accounts contributions, and others might cost as much as $50 per employee, depending on how many employees you have and how often they are paid. Payroll processing companies usually also charge a fee for adding employees (new hires) or for changing employee pay information (amending a W-4). Make sure you are aware of these fees, which can add up quickly.
A big cost consideration is the frequency pay periods. Most businesses pay employees weekly, bi-weekly, or monthly. The shorter the pay period, the more checks or deposits. Lengthening pay periods to one month is one way to save on costs. Check printing can be expensive especially if done often. In fact, most companies will actually offer direct deposit at a less expensive rate than paper checks.
As a business owner, it’s a good idea to get quotes from as many vendors as possible. If any offer you a free trial, take it- this is a great way to check out the service, to see how easy it is to use, and to make sure calculations are timely and payment is made correctly. Costs and procedures will vary by company, so make sure to find one that works well with your business.