How Much Do Online Payroll Service Prices Cost in 2023?

Online payroll services cost at least $39 a month plus an additional cost per user, totaling between $14 to $25 per employee, however, larger employers will see a lower per-employee cost.

40% of business owners consider payroll-related tasks to be the worst part of running a business.

Between pay frequency, health insurance, and employee benefits, 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.

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Rather than spend this time on the frustration of payroll, you might consider outsourcing your payroll tasks to a payroll company. While many small business owners 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.

Who Offers the Best Online Payroll for the Lowest Price?

Some companies for to avoid payroll in-house after discovering the monthly base fee for outsourcing payroll service costs less than expected. It’s always a good idea to compare monthly costs in the pricing structure from fast payroll services providers in your area.

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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.
Type of online access

The average cost will range from $55-$610 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 its 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 $3,000-$5,200 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.

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What Impacts the Cost of Payroll Outsourcing?

The monthly cost of payroll outsourcing can be influenced by various factors, which are important to consider when evaluating different service providers. Some key factors impacting the cost of payroll outsourcing include:

Number of employees: The total cost of payroll outsourcing often increases with the number of employees in the organization. Service providers typically charge on a per-employee basis, so larger companies will generally have higher costs.
Payroll frequency: The frequency with which your payroll is processed (e.g., weekly, bi-weekly, or monthly) can impact the total cost of your monthly base fee. More frequent payrolls may result in higher costs due to increased processing and administrative work.
Additional services: Payroll outsourcing companies may offer additional services such as human resources management, time and attendance tracking, employee benefits administration, or tax filing. These added services can increase the overall cost.
Customization and complexity: If your organization has unique payroll requirements, such as complex compensation structures, multiple locations, or varied tax jurisdictions, the cost of outsourcing may be higher due to the increased complexity and customization required.
Integration with existing systems: The cost of payroll outsourcing may be impacted by the need to integrate the outsourced service with your organization’s existing systems, such as accounting software or HR management systems. This may require additional work and investment.
Service level and support: The level of customer support and service provided by the payroll outsourcing company can also impact the cost. Higher levels of support, faster response times, and more dedicated account management typically come with higher costs.
Vendor reputation and experience: Well-established vendors with strong reputations and extensive experience may charge higher fees than smaller or less experienced providers. However, the higher costs may be justified by the quality of service and expertise provided. Quickbooks payroll, Gusto, Square payroll, and ADP are a few trusted brands for HR tools, tax filing service, and other payroll relation functions.
Contract terms: The length of the contract and any early termination fees can impact the overall cost of outsourcing. Longer contracts may offer discounted rates, but they may also come with penalties for early termination.

It’s essential to carefully consider these factors and weigh the benefits and drawbacks of outsourcing payroll before making a decision. Comparing multiple service providers and negotiating the best possible terms can help organizations find a cost-effective solution that meets their needs.

What Does a Payroll Outsourcing Service Do?

Payroll outsourcing allows small and large businesses to place the burden of processing payroll on a third party. From a per-employee fee to basic payroll services, you can easily avoid payroll mistakes with this online solutions. Simply provide the service with some basic data:

Company contact info and demographics.
Employee info (number of employees, pay rates, direct deposit info, etc.)
Timecard 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.

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Online Bookkeeper Service Plans

An online bookkeeper service will work similarly to a local bookkeeper. With the online solutions, your communication will work remotely rather than in person. This remote access to online payroll software 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 $4,200-$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 it 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 $59.
Coastal HR- monthly cost starts at $84.
Paychex– monthly cost starts at $59.
QuickBooks – $50/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.

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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 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 $50.
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.

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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 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 for each system.

Advantages and Disadvantages of Payroll Outsourcing

Payroll outsourcing can offer several advantages and disadvantages, which organizations should carefully consider when deciding whether to outsource this function. Here is a summary of the main pros and cons:

Advantages of Payroll Outsourcing:

Cost savings: Outsourcing payroll can lead to cost savings by eliminating the need for in-house payroll staff, software, and other resources. In some cases, outsourcing can be more cost-effective than managing payroll internally, especially for small to medium-sized businesses.
Time savings: Payroll processing can be time-consuming, particularly for businesses with complex compensation structures or a large number of employees. Outsourcing this function can free up time for business owners and HR staff to focus on core business activities.
Expertise and compliance: Payroll outsourcing companies have specialized expertise in handling payroll taxes, regulations, and compliance. This can help businesses avoid costly mistakes, penalties, and fines associated with non-compliance.
Access to technology: Payroll service providers often utilize advanced software and technology, which may be more sophisticated than what is available to individual businesses. This can result in more accurate, efficient, and secure payroll processing.
Scalability: Outsourcing payroll can make it easier for businesses to scale their operations as they grow. Service providers can quickly adjust to accommodate changes in the number of employees or payroll requirements.

Disadvantages of Payroll Outsourcing:

Loss of control: When outsourcing payroll, businesses relinquish some control over the process. This can be a concern for some organizations, particularly if there are concerns about data security, privacy, or the quality of the service provided.
Dependency on a third party: Outsourcing payroll creates a dependency on the service provider, which can be a risk if the provider encounters financial, technical, or operational problems.
Hidden costs: While payroll outsourcing may initially appear cost-effective, there may be hidden costs such as setup fees, charges for additional services, or fees for making changes to the payroll process.
Data security and privacy risks: Outsourcing payroll involves sharing sensitive employee data with a third party, which can pose security and privacy risks. It is crucial to carefully assess the service provider’s data security measures and policies.
Limited customization: Some payroll outsourcing providers may not offer the flexibility or customization required for businesses with unique payroll requirements. This can be a disadvantage if the service provider is unable to accommodate specific needs or preferences.

When considering payroll outsourcing, it is essential to weigh the advantages and disadvantages and evaluate how they align with your organization’s needs and priorities. It may be helpful to consult with other business owners or industry experts to gather insights and recommendations.

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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 the 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 that will give you an idea of how much you will pay for your purchase.

$55 – $75 average monthly cost for a 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.
The average monthly cost for the payroll of a company with 30 employees and weekly payroll is $300 to $600.
Year-end W2 and 1099 costs for businesses with 30-50 employees are $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 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 means 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.

How to Save Money on Online Payroll Services

Online payroll services have become increasingly popular among small and medium-sized businesses due to their convenience, accuracy, and affordability. However, some businesses may still find the cost of these services to be a burden. Here are some tips on how to save money on online payroll services:

Compare prices: Before signing up for an online payroll service, compare prices between different providers. Look at what each service offers and determine which one best suits your business needs and budget.
Choose a basic plan: Many online payroll services offer multiple plans with varying features and prices. Consider opting for a basic plan that includes only the features you need, rather than paying for additional features that you may not use.
Sign up for a trial: Many online payroll services offer free trials, which allow you to test out the service before committing to a subscription. Take advantage of these trials to see if the service meets your needs and fits your budget.
Automate as much as possible: Online payroll services can save you time and money by automating many payroll tasks, such as calculating taxes and generating reports. Make sure to take advantage of these features to minimize manual work and reduce the risk of errors.
Avoid unnecessary fees: Some online payroll services charge additional fees for certain features or services. Make sure to read the fine print and avoid signing up for features that you don’t need or that come with extra fees.
Pay annually: Some online payroll services offer discounts if you pay for a year of service upfront. This can be a good option if you’re committed to using the service long-term and can afford to pay upfront.
Consider bundling services: Some online payroll services offer additional services, such as HR or benefits administration. If you need these services, consider bundling them with your payroll service to save money.

In conclusion, online payroll services can save businesses time and money, but it’s important to choose the right service and plan for your needs and budget. By comparing prices, automating tasks, avoiding unnecessary fees, and bundling services, you can save money on your online payroll service.

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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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