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What Is The Average Cost Of Payroll Processing?

May 29, 2024by Barbara Flynn0

The average cost of payroll processing can vary widely depending on several factors including the size of your business, the complexity of your payroll needs, the frequency of pay runs, and the service provider you choose. Generally, payroll processing costs can be broken down into a few categories:

  1. Basic Service Fees: These are often charged per employee or per paycheck. Prices can range from $20 to $100 per month, plus an additional per-employee fee which can range from $2 to $15. Some services charge a base fee that includes a certain number of employees, with additional charges for each employee beyond that.
  2. Full-Service Payroll: This includes additional features like filing taxes, handling tax compliance, and dealing with year-end forms like W-2s and 1099s. The cost for full-service payroll can be significantly higher, ranging from $50 to $200 per month, with per-employee fees of about $5 to $12.
  3. Additional Services and Fees: Some payroll providers charge extra for services such as direct deposit, check delivery, or generating reports. There might also be one-time setup fees or fees for year-end tax processing and delivery of tax forms.
  4. Software vs. Outsourced Services: If you choose to manage payroll using software rather than outsourcing to a payroll service, the costs can be lower but require more hand-on management. Software can range from $25 to over $100 per month depending on its capabilities and the number of employees.
  5. Integrated HR Systems: Some businesses might opt for an integrated system that combines payroll with other HR functions like benefits management and time tracking. These systems are typically more expensive but offer comprehensive solutions that can simplify processes and improve compliance.

Overall, small businesses might expect to spend anywhere from $30 to $250 per month for payroll processing, depending on their needs and the level of service they require. It’s a good idea to get detailed quotes from several providers and to clearly understand what is included in each plan to find the best match for your business needs.

Barbara Flynn

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