Compare Online Payroll Service Prices : Calculate Payroll Outsourcing Cost in 2020
Base rate Online payroll services cost $49 a month and ranges between $13 to $19 per employee, however larger employers will see a lower per-employee cost unless add-ons services are required such as HR and tax services.
40% of business owners consider payroll-related tasks to be the worst part of running a business.
This struggle has a lot to do with how time-consuming payroll can be. Just for tax-related tasks, businesses can end up dedicating more than 80 hours per year. This eats into valuable time that businesses could spend on other tasks.
Rather than spend this time on the frustration of payroll, you might consider outsourcing your payroll tasks. While many businesses believe the cost of payroll services is too high, the payroll outsourcing cost may prove cheaper in terms of training, time, and fees for incorrect filing.
See who offers the best online payroll for the lowest price in 2020
Payroll Outsourcing Cost
The cost of payroll services will depend on several factors.
- The size of your company.
- Where you’re located.
- The outsourcing services you choose to use.
The average cost will range from $45-$600 per month depending on the company you use and the services you require. The cost could be up to $1,000 if you require extra services though.
The service providers can range from a local bookkeeper to a full professional employer organization (PEO). The payroll services you receive will vary between the different outsourcing providers.
Let’s take a look at the different options for payroll outsourcing and automation. Keep in mind that each option will have their pros and cons. They will also differ based on the amount of work you outsource to them.
Local Bookkeeping Service Rates
A local bookkeeper or accountant can provide payroll services for your company. This is one of the cheapest options overall, and using a local bookkeeper can provide personal service. This is a useful option if you’re already using a local bookkeeper for other financial processes.
The payroll outsourcing cost for a local bookkeeper ranges from $4,000-$5,000 per year. It may cost more if you use a CPA instead of a general bookkeeper.
While this option allows for more personal service, it does have its drawbacks. Depending on the software they use, the process might prove more complicated than other payroll services. You also need to make sure any local bookkeepers are aware of changes to labor and tax laws each year.
What Does a Payroll Outsourcing Service Do?
Payroll outsourcing allows you to place the burden of processing payroll on a third party. You provide the service with some basic data
- Company contact info and demographics.
- Employee info (number of employees, pay rates, direct deposit info, etc.)
- Time card info for each pay period. This process is easier if you also have time-tracking software to keep up with your employee’s time each week.
- Vendor info, if you’re using the service to pay vendors.
The payroll service will use this data to do the rest of the processing for each pay period. Depending on the services you use, the outsourcing service will take care of all payments and tax deductions involved with your payroll.
They will take care of calculating the payments and tax deductions. The service will also take care of processing direct deposits to employee accounts.
Most payroll service options can also process all end-of-year tax documentation. This includes W-2 and 1099 paperwork. These services will likely cost extra, so this should be taken into consideration when choosing the service provider.
During tax time, the outsourcing service will take care of paying the payroll taxes and any other deductions involved. If you choose the service, they will also take care of regular payments to vendors. Plus, you will receive regular reports to keep your records up-to-date.
Payroll services are useful in cutting penalties associated with payroll taxes. 40% of businesses end up paying extra fees to the IRS because of issues with their filing. With a company dedicated to keeping up with the requirements, you can cut out this extra expense.
Online Bookkeeper Service Plans
An online bookkeeper service will work similar to a local bookkeeper. With this option, your communication will work remotely rather than in person. This remote access can make things more difficult if you need to get in touch with someone right away.
Online services have a similar cost range to local bookkeepers. The price ranges from $4,000-$6,000 per year. Online bookkeepers provide more than just payroll services, so this is part of the difference in price. They may also require additional fees for special processes.
Keep in mind that an online bookkeeper service may not have updated laws for your state. Make sure you vet an online service before using so you know they can serve your area appropriately.
Payroll Software Packages
Payroll software is an option for businesses that want to keep payroll tasks in-house, yet want to automate the process. This isn’t a full outsourcing option, but it does offer more automation of the process.
Depending on the payroll software you use, you can also gain access to customer support to help you with the process. You will still have to do the work in-house, but the software will decrease the amount of time spent on the minutia of payroll.
Payroll software ranges from $2,000-$4,000 per year, making it the cheapest option. It’s cheaper because it doesn’t completely outsource the process, so keep that in mind when comparing the payroll outsourcing costs.
Payroll software is updated regularly, so you don’t have to worry about outdated laws and regulations. This is helpful when it comes to minimizing fees and penalties. You still need to be careful because the process is still in the hands of your team.
Professional Employer Organization
A PEO is the most expensive option available for outsourcing payroll tasks. A PEO is more expensive because it offers several services other than payroll processing. The PEO service provides HR, payroll, benefits, insurance, and retirement processing.
If you want to automate the full employee management process, this is a good option. The price ranges from $12,000-$40,000 per year depending on the services you use. Some of the most reputable PEO companies include:
- ADP– monthly cost starts at $85.
- Coastal HR- monthly cost starts at $84.
- Paychex– monthly cost starts at $88.
- QuickBooks – $45/month
Remember that these prices are a base monthly fee. These prices are subject to change based on the services used. These prices are based on a company with 30 employees or less, so prices are also subject to change if you have a larger employee count.
Prices also increase with extra payroll services such as direct deposit and end-of-year tax documentation. A PEO will be updated on all laws and regulations involved with the payroll process, but you don’t want to use this option if payroll is all you need to outsource.
Dedicated Payroll Provider
If you want an option that’s dedicated to the payroll process, your best bet is a full-service payroll provider. With this option, you can outsource every part of the payroll process to an organization dedicated to the task.
The payroll outsourcing cost of a full-service provider will range from $3,000-$7,000 per year. This cost includes processing all tax documentation, including new hire forms. All you must do is provide the necessary business data, and they’ll take care of the rest.
Using a payroll provider cuts down on mistakes which saves you money in the long-run. Payroll providers have complete and up-to-date labor and tax laws built into the system. They cover both federal and local laws with their systems.
While the remote access to payroll providers reduces the communication convenience of a local service, they do offer consulting services. This means you do have access to a customer support team throughout the year. Payroll providers also offer dedicated, experienced teams to cover your payroll processes.
Each payroll provider starts with a monthly base rate. This is the cost for using the basic services. In order from least expensive to most expensive, the major payroll providers and their base rates are:
- Intuit (Quickbooks) – monthly cost starts at $20.
- Payficiency – monthly cost starts at $35.
- PayUSA – monthly cost starts at $35.
- Gusto (formerly ZenPayroll) – monthly cost starts at $39.
- Onpay Payroll – monthly cost starts at $40.
- Benefitmall – monthly cost starts at $57.
- MyPayroll– monthly cost starts at $63.
- IOI – monthly cost starts at $66.
- Complete Payroll Solutions – monthly cost starts at $69.
- SurePayroll – monthly cost starts at $80.
Remember, the cost is dependent on the services offered and the number of employees. The base price covers a limited number of employees, usually around 30 people. Additional fees are processed for added employees.
Each payroll provider offers different services with their base fee. Other fees are required for extra services such as direct deposit and end-of-year tax documentation.
While this may seem costly, keep in mind that you remove the need for an extra employee for payroll. You also save money with accurate tax processes. Another benefit of payroll providers is the integration.
Payroll provider software is easily used with other tracking software such as time-tracking and bookkeeping programs. This makes it easier to provide new data between each system.
What to Know About Payroll Outsourcing
If you want to get the most out of your payroll outsourcing service, make sure to vet each service thoroughly. This means knowing what questions to ask before paying for the service.
- What training and support do they provide?
- What security systems do they have in place for sensitive info?
- How do they keep their systems up-to-date with relevant labor and tax laws?
- What is their reputation with other customers?
- What insurance and certifications do they have in place?
- How long have they been in business?
- Do they have any fraud cases past or present?
It’s important to choose a reputable payroll provider. There are fraudulent services out there, and you don’t want to fall victim to these scams.
You can find info about the different payroll service providers by asking questions of their representatives or looking at recommendations. Most businesses have a ranking on Google or other business sites where customers leave feedback about their experiences.
These third-party ranking systems allow you to find reviews you can trust. A reputable provider will also be willing to show all documentation of compliance with federal and state laws where necessary. In fact, most will have this information readily available to new customers.
You can also use a business guide to help you vet payroll providers. Websites that provide resource guides have already done the work of proving reliability and comparing plans and prices for the different providers.
This means you’ll get an unbiased and accurate payroll outsourcing cost comparison. It also means you’ll get the support you need to choose the provider that’s right for your business needs. You don’t want to pay for services you don’t need.
Business Services for Every Process
Payroll services are just one aspect of automating business processes. Automation is important for cutting costs and increasing efficient practices. When choosing to automate your business processes, it’s important to compare the systems available so you choose services that are compatible.
Payroll outsourcing cost is not the only cost to consider. There are many processes that benefit from automation. Everything from bookkeeping systems to phone systems can benefit from automation and cut costs and time wasted on processing necessary data.
If you’re ready to automate your office, payroll outsourcing is a good place to start. For more info about other automation and time-saving services, check out our collection of buyer’s guides for the different products available. We update the guides and info regularly to provide you with the best options for your business.
Online Payroll Sample Costs
Below are a few examples of price facts for online payroll services which will give you an idea how how much you will pay for you purchase.
- $55 – $75 average monthly cost for small office of 2-5 employees.
- $1.00 to 1.50 average payroll processing cost per check (does not include base rate).
- Direct deposit ranges from free to $0.10 per check deposited.
- Average monthly cost for payroll of a company with 30 employees and a weekly payroll is $300 to $600.
- Year-end W2 and 1099 costs for businesses with 30-50 employees is $250 to $500 (one time fee per year).
Most online payroll services can also be integrated with other bookkeeping and/or employee tracking software, enabling you—and your payroll processing company—to automate much of the necessary documentation and calculation; services typically do not charge extra for this integration as it enables them to do their job more easily and securely. All in all, payroll services in general often provide a significant savings versus using in-house staff to calculate and double-check payroll each period, and online payroll services can save you 15% compared to traditional providers.
What to Look for in the Cost of an Online Payroll Service Provider:
One of the biggest benefits offered by many online payroll processors is their guarantee of accuracy, both in calculating paychecks and in calculating and allocating resources for taxes. Upwards of 40% of small businesses end up paying penalties to the IRS every year due to mistakes made in paying their employees and/or in their employee tax deductions and payments; having another company bear the burden for accuracy can be worth the fee in and of itself. Make sure the payroll processor you select provides a guarantee in this area to better protect your business.
Also, look into legal and consumer complaints that have been lodged against the company. Like all businesses, you can expect some disgruntled users to have published negative reviews, but if you see a lot of the same complaint or if there have been serious legal problems in the recent past, steer clear—while a good payroll processor can be a great asset, hiring a cheap company with a shady reputation is a great way to land in a lot of hot water.
Finally, make sure you can easily get hold of someone at the payroll processing company who is knowledgeable and informed about your account if you ever have a problem. Changing laws and changing employment situations mean communication is key, and ultimately you’re responsible for making sure things are done correctly. If you can’t get someone accountable to handle your accounts, move to a different processor.
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Related Services Available: Small Business, Direct Deposit, Taxes, Tax Filing, W-2, 1099, File, Employee, Workers Compensation
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Related Information: IRS